Bob Volman Price Action Scalping

This is a discussion on Bob Volman Price Action Scalping within the Forex forums, part of the Markets category; Originally Posted by vanica Hi everyone! I'd like to join your discussion. Unfortunately at this point I have more questions ...

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Old Jul 26, 2012, 6:00pm   #31
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Re: Bob Volman Price Action Scalping

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Hi everyone!

I'd like to join your discussion. Unfortunately at this point I have more questions than experience to share and would appreciate your help.

Yesterday I was watching this range forming and it seemed to me there were some opportunities for the IRB trades. Do you see any technical reasons to skip these setups?

Click the image to open in full size.

Thanks.
I think it's usually better to let ranges like these, those that form between two 20-levels, set up a bit more before trying to trade them. If you take a look at Bob's examples in the book, the IRB setup usually takes quite awhile to form (relative to the start of a particular ranging formation). So it may have been too early to consider trading that first IRB. There also the matter of the immediate clustering to the left of the setup (right above the bottom barrier), which indicates strong support. Couple that with the scant buildup to the break of the IRB setup and I think this was a low odds setup. The barrier is likely to hold for awhile longer and it possible that your stop may be taken out.

As for the second and third setups, you are trading against the overall pressure, which is bearish. Just because the bottom barrier seems to be holding doesn't mean prices go up and test the upper barrier (unlikely but possible). Do you think the bears are going to bail when the setup break to the upside? What pain are they feeling that would become unbearable at the break of the setup? I can't think of anything. You also have to ask yourself where's the next level/area that give the bears a good chance to counter your long trade. I think that would be the the first "IRB" setup, which blocks your path to target. I think these reasons are enough to skip the second IRB setup.

As for the third one, you are trying to trade into resistance in the form of those double tops at the 1.2132 level. The bears capped the bulls two at this level. Take a look at the overall picture. The bulls are slowly getting squeezed. See how the bears shorted at lower and lower levels, creating those lower highs? The bulls didn't give up after that second double top when they kept prices one pip above the bottom barrier but that does not mean they are winning the fight. It's possible that the bulls may wriggle themselves out of this squeeze but I don't think that the third IRB setup you drew gave any indication that they would. All they could manage to do was print an equal high at the 1.2129 level, at which point they were quickly countered by the bears. This was where the double pressure occurred. The bulls tried one last time to bring prices up but when the bears quickly countered them, breaking the 1.2126 level, the bulls bailed which helped pushed prices down and out of the range. I don't think we could have traded this double pressure using Bob's method though.


No trades for me today. I had trouble sleeping last night and woke up later than usual which made me miss that crazy 160+ move that started at 10:00AM GMT. I was pretty sleepy/unfocused throughout my session so I probably missed some setups.
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Old Jul 26, 2012, 6:24pm   #32
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Re: Bob Volman Price Action Scalping

Thank you a lot BLS for such detailed explanation. I'm very grateful that you keep this thread going. Hope you will continue finding value in it. As a person with not much of practical experience using this methodology I've already found a lot of invaluable information here and will try to contribute in the future.
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Old Jul 27, 2012, 7:30am   #33
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Re: Bob Volman Price Action Scalping

BLS,

Sorry for a rather technical question, the vertical scale on my prorealtime chart adjusts to the price, meaning if the price range gets smaller the size of the candles increases and visa versa. Could you please describe how you changed these settings and also how you made 20 levels highlighted.

Thank you.

Last edited by vanica; Jul 27, 2012 at 7:36am.
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Old Jul 27, 2012, 11:22am   #34
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Re: Bob Volman Price Action Scalping

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BLS,

Sorry for a rather technical question, the vertical scale on my prorealtime chart adjusts to the price, meaning if the price range gets smaller the size of the candles increases and visa versa. Could you please describe how you changed these settings and also how you made 20 levels highlighted.

Thank you.
Right click on a chart and go to "chart settings". Set vertical scale density to low. Then click on the left side of the chart, the part with the prices, and drag up or down until you get the scale that you want.
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Old Jul 27, 2012, 1:48pm   #35
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Re: Bob Volman Price Action Scalping

Did you find a way to minimize the amount of with trend trades taken on false breakouts (in hindsight)? In this chart it looks like the level which was previously a resistance (1.2313) was successfully tested (though not to the tick) and the setup that followed (SB) didn't have any resistance on the way to the profit target.

[IMG]Click the image to open in full size.[/IMG]
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Old Jul 27, 2012, 4:03pm   #36
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Re: Bob Volman Price Action Scalping

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Originally Posted by vanica View Post
Did you find a way to minimize the amount of with trend trades taken on false breakouts (in hindsight)? In this chart it looks like the level which was previously a resistance (1.2313) was successfully tested (though not to the tick) and the setup that followed (SB) didn't have any resistance on the way to the profit target.

[IMG]Click the image to open in full size.[/IMG]
There wasn't much you could do about that false counter move. The closest stop beyond the tightest one was that low at 1.2313. You wouldn't consider giving the stop an extra pip or two because there is no corresponding low/high on the chart. I skipped this setup altogether because it was 10 minutes before the US GDP figures were to be release. That likely meant that many traders would wait for the numbers to come out before trading so you wouldn't get any follow through on the break anyway.
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Old Jul 27, 2012, 4:52pm   #37
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Re: Bob Volman Price Action Scalping

Thanks for your reply BLS. It seems the overall market dynamics, which sometimes depends on particular time of the day, is as important as determining the direction and entry points. Considering tight stops all the setups require pretty fast follow through, and I guess taking trades only in the most favorable conditions is one of the main difficulties.

Last edited by vanica; Jul 27, 2012 at 5:00pm.
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Old Jul 28, 2012, 12:20am   #38
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Re: Bob Volman Price Action Scalping

E1 (+9.5 pip): Straightforward range break with a textbook squeeze. I closed my trade out early by 0.5 pip because my index finger was itchy. I think I'm developing a bad habit.

I broke a my rule for not trading while eating breakfast but I had to make an exception after seeing the overall pressure was favorable and seeing that textbook squeeze.

E2 (+10.1 pip): After my first trades, the bulls bought prices up all the way to the highs of (1). They did this without much buildup so that made it hard for them to keep prices above the 1.2300 level. The bulls tried to continue their trend but were slammed back at (1). The bulls tried to push prices up at lower levels but failed (2,3,4). The bulls managed to halt the slide in prices by forming a block ( I decided not to trade the break of it), which acted as a base of support. They used this base to bring prices back to the 00 level where they fought it out with the bears for control. This was a pretty textbook setup with the bears getting squeezed. There is some clustering to the left at (1) but giving the strength of the setup and how far that clustering is from my setup, I was not worried by it.
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Old Jul 30, 2012, 9:19pm   #39
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Re: Bob Volman Price Action Scalping

E1 (+0.5 pip): The chart starts off with some downward pressure after the bulls failed to break past the 90 level, followed by an attempt to retake the 80 (1). We get a hint of a possible range formation when the slide in price is halted by the bulls right above the 60 level. This is a typical range fight, right between two 20-levels, with a false break on each side (3 and 4). The pressure is slightly in favor of the bears but it's too early to take any trades. Things start to get interesting when the bears printed a lower high (5) and tested the 60. The subsequent bullish response (blue bar, 6) gave us a bottom to connect with the lows of (2) to draw a bottom barrier. It's rough but it'll work until price shows us otherwise. There's still some bullish hope left as the bulls make a higher high (7) that pierces the 20 EMA but the bears are ready and waiting to sell heavily until prices break the bottom barrier. We've got a some buildup and a nice squeeze and I take a short at the break of the barrier.

My entry slips by a pip or so and I don't get much follow through on the break. I begin to trail my stop aggressively because it appears that support around the 60 level maybe stronger than I have anticipated. I move my tipping point down the lower barrier of the range when prices tested the 60 level (8) and dropped to the 53 level. Prices start to go sideways and I figure that if prices can't move on then that will increase the odds that I will stopped out in a counter move so I trail my stop 3 pip lower. I got nervous and bailed out one pip early of newest stop. I need to work on trade management because this latest stop was too aggressive. I probably should've moved the tipping point to the 60 level, where prices tested it successfully and tried to move on (8).
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Old Jul 30, 2012, 9:21pm   #40
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Re: Bob Volman Price Action Scalping

E2: After a lengthy down move prices printed a reverse head and shoulders formation (1,2,3). This would give the bulls an excellent chance to reverse the down slide but the bears capped prices at the highs of (4) and slammed prices back down. The bulls look like that might be in for a squeeze as they fail to buy prices back up above the 40 level (6). The bulls didn't give in a used the double bottom (5, 7) as a base of support to fight back. Prices stall out at the highs of (8), allowing us to draw a barrier. That test of the 40 area (9) was a very welcome sign as it made it more likely for prices to move on up. Prices break out of the range barrier too quickly for me to trade but a ARB setup of the clustering variety formed right above the barrier.

Prices jumped up 3 pip so my entry ends up slipping by 1-2 pip (tried to enter on 53 but filled at 55). The trade was rather healthy for the most part but the bulls had trouble clearing the 60 area. I decided to bail 3 pip short of target after prices could not follow through on the break of a previous high. Had I gotten filled at my desired entry I probably would have made target. The trade eventually sours.


I'm sorry if my analysis doesn't seem to be as detailed as my other posts. I'm feeling a bit lazy today.
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Old Jul 30, 2012, 9:32pm   #41
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Re: Bob Volman Price Action Scalping

I finally got a copy of Bob's book and started reading it. Very interesting stuff, well articulated from both a technical and psychological POV like no other book I've encountered to date. I just got through the first three setups, DD, FB, and SB.

Since I don't have tick charts on Oanda's platform I tried using the 30 second setting. My concern is the difference between the tick and the time based charts, because the moving averages will definitely be different in the tick charts versus the time based ones. It's really a bummer because in order to use ProRealTime charting you have to shell out about $50 a month, unless anybody knows of a broker that provides them for less?
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Old Jul 30, 2012, 9:39pm   #42
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Re: Bob Volman Price Action Scalping

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I finally got a copy of Bob's book and started reading it. Very interesting stuff, well articulated from both a technical and psychological POV like no other book I've encountered to date. I just got through the first three setups, DD, FB, and SB.

Since I don't have tick charts on Oanda's platform I tried using the 30 second setting. My concern is the difference between the tick and the time based charts, because the moving averages will definitely be different in the tick charts versus the time based ones. It's really a bummer because in order to use ProRealTime charting you have to shell out about $50 a month, unless anybody knows of a broker that provides them for less?
Another user that used to post about Volman's method (Mike) used NinjaTrader with Hirose Financial UK. You can use tick charts with NinjaTrader and I think you can set it so that the smallest increment in price is 1 whole pip. I don't know the details so I'm not sure if you can use a live data feed with the free version of NinjaTrader. You definitely have to pay if you want to trade live through NinjaTrader's charting package though.
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Old Jul 30, 2012, 9:45pm   #43
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Re: Bob Volman Price Action Scalping

Hi BLS,

Very nice trades today! Could you please share your thoughts on the 10 pip profit target you are using? Do you think it has any technical significance for institutions and big traders in which case we should measure 10 pips from the break point of a setup; or is it more of an arbitrary target measured from the actual entry point?

Thank you.
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Old Jul 30, 2012, 10:37pm   #44
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Re: Bob Volman Price Action Scalping

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Hi BLS,

Very nice trades today! Could you please share your thoughts on the 10 pip profit target you are using? Do you think it has any technical significance for institutions and big traders in which case we should measure 10 pips from the break point of a setup; or is it more of an arbitrary target measured from the actual entry point?

Thank you.
I think it's more of an arbitrary target measure from the actual entry point, though obviously it's better to get in at the break of a setup. Bob said in one of his emails replying to me that he never fiddles with the stop loss/profit target while in a trade (to match the actual point of entry); he lets the stop loss/target profit orders do their thing or exits with the tipping point technique. I still have trouble accepting this as I worry about my fills all the time. It's something I have to work on.
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Old Jul 30, 2012, 10:38pm   #45
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Re: Bob Volman Price Action Scalping

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You can use tick charts with NinjaTrader and I think you can set it so that the smallest increment in price is 1 whole pip. I don't know the details so I'm not sure if you can use a live data feed with the free version of NinjaTrader.
I signed up for a demo account on GFT, and fed it through NinjaTrader, setting it up to a 70 tick chart. Works at 1 pip at a time right now.

I'm going to use this to compare between the 30 second chart and see how the setups differ from one to another.

Tick charts seem cool but I don't care to be burning $50 a month until I'm sure I actually need them to trade. Incidentally it appears from the language that Volman seems to be trading the CME contracts, because he refers to his positions as 'contracts' as opposed to lots which is common lingo in the spot market. But there is no direct evidence either way.
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