Bob Volman Price Action Scalping

thedawgee said:
Hello,

I have been reading Bob's other book, for the 5 min charts, and although it requires a frustrating level of patience, it has a very good strike rate. I refer to the 5 min charts when the market gets choppy. Here is the only trade that I entered today. There was some hesitation on my behalf due to the possible obstacles to the left but it managed to get to target. It appeared that the bull break against the earlier bearish momentum was failing at the EMA, 50 level, and at the 50% pullback area, so I entered a short.
Click to expand...

I've been thinking a lot about the trade you took. I remember watching the W block form and thinking to myself "do not go long with the MA not that far away and having not yet been touched" (I don't regret that skip). I was thinking that if the W block did break bullishly where it broke that it would break for something like 4-6 pips, stall and then form a small M block at the top of the W block barrier that could then set up a bearish break trade for failure.

That's not what happened and instead it broke out explosively for about 16 pips all the way to the 60 level, and totally ignored the 50 level on the way up. On top of that price not only made it back to the MA (5 min chart), but it also pierced it by a healthy amount.

After seeing that I said to myself "that sucks", because I knew it would be awhile before something trade-able would set up again. So I stopped paying attention (I gotta quit doing that lol).

Not too long later I check my charts again and I see on the 70 tick chart that a small tight block was broken bearishly completely countering the previous bull move. Obviously without watching the charts I'm going to miss that trade, but I don't think I would have gone short on such a tiny block like that, especially after such a strong bull move.

You're correct to look for a trade with the ingredients of a 50% retracement (or greater) and a pullback to the MA. You said failure of the 50 level, it looks more like a failure of the 60 level with the 50 level pulling price back down, but all in all pretty much the concept in BV's book regarding a bearish triple. The other thing that made the trade attractive was that it was the first pullback to the MA.

So I gotta take my hat off and say well done taking that trade. I was really thrown off by the strength of the bull break. Had this type of PA occurred after a news release or from unscheduled news then I wouldn't have been surprised by the way price did move......I haven't looked over old charts, but even so it's gotta be rare for price to move that way under normal conditions, I certainly can't remember a similar trade in the last month or so.

I noticed from your charts that you labeled the trade a trade-for-failure, it's not a TFF. I'd hate for you to be making poor trades by missing key ingredients necessary for a trade to qualify as a trade for failure. I added a few charts to help explain.

1: it was the 1st PB to the MA (can be done on a 2nd PB but more potent on the 1st)

2: you want price to return to the top of the box and close at the top or just inside the box, and then be broken

3: you also want the bullish W block to get transformed into more of a flag, and you want the flag line to be broken too

Looking at the 5 min chart you can see that your entry was well above the top barrier of the W block and also didn't break any flag line.

I guess if you were to strictly follow the entry requirement of a TFF then the entry would have occurred after the break of the powerbar under the label T1. Of course BV points out to not trade the break of such a powerbar, those breaks have no buildup within the powerbar and also don't provide a nice place for your stop. Sure enough the break of the powerbar didn't go far.

The entry at T2 sets up better for a TFF. I declined it on account of the way price went straight from the top of the block to the top of the W block barrier extension and then broke through (see 70 tick chart), but also because of the sharp bull break followed quickly by the sharp bear break, I wanted to give the market more time to sort things out.

So your trade was not a TFF....it's really not any trade setup from BV's 2nd book lol (not laughing at you).....but it was a trade made in a key area (it had the ingredients of the triple). I don't know how to label that trade other than it was a good trade (perhaps a little ballsy).

By the way what did you mean when you said "it has a very good strike rate"?
 

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Hi, new here, first post but have read most of them with interest Am also new to trading although done a lot on the sports trading exchanges with mixed results! Reading Bob's first book 3/4 way through it and have tried trading for a couple of months following the advice in the book. One thing in the tipping point section says never move the 10 point profit limit, I spose if I even have to question this, the advice from you all would be to stop trading until I fully understand all the principles of the book! But once in a trade and the price carries on in your favour and flies past your 10 point profit limit I have often removed this limit and carried on increasing the profit sometimes 40-50-60 points with the theory that if it starts to drop back down in one of those eventual reversal patterns I can come out with extra profit above the 10 point limit, it seems to me to come out early when on a roll, so to speak, is a bit of shame when you could bag all that extra profit. It has worked for me several times and even if you lose out sometimes because the profit sometimes quickly drops below the 10 points, so you have to take less profit, the advantages of bigger gains outweigh the disadvantages of occasionally having to take less than 10 points on the pullback. If this is completely wrong please put me straight! Thanks.
Gus
 
GUSCHER said:
One thing in the tipping point section says never move the 10 point profit limit, I spose if I even have to question this, the advice from you all would be to stop trading until I fully understand all the principles of the book! But once in a trade and the price carries on in your favour and flies past your 10 point profit limit I have often removed this limit and carried on increasing the profit sometimes 40-50-60 points with the theory that if it starts to drop back down in one of those eventual reversal patterns I can come out with extra profit above the 10 point limit, it seems to me to come out early when on a roll, so to speak, is a bit of shame when you could bag all that extra profit. It has worked for me several times and even if you lose out sometimes because the profit sometimes quickly drops below the 10 points, so you have to take less profit, the advantages of bigger gains outweigh the disadvantages of occasionally having to take less than 10 points on the pullback. If this is completely wrong please put me straight!
Click to expand...

I certainly don't think it's "completely wrong". I think that if you can show (yourself) that over a statistically significant number of trades, that's more profitable than the alternative(s), then you've taken Volman's work and incorporated it successfully into your own trading style. I don't mean that to sound in any way disparaging: it's what I've gradually done, myself.

(One possible solution/method, to try to cover the situations you're discussing, is to trade three lots, closing the first two with a less-than-10-pip profit which still locks in some profit, and then manually trailing the stop-loss on the third when there appears to be enough volatility to justify doing so, but it's both labour-intensive and concentration-intensive, and personally I've found that it's no trivial matter to demonstrate that this it's necessarily worthwhile, overall.)
 
Yes, sometimes you will make more than the 10pips, and in principle if you find it works for you then by all means do it. However, watch for the following...
- it may complicate things. More trade management is needed.
- it may keep you out of new trades while waiting to see a weakening trade complete.
- where is your stop, relative to your new potential target. Are you hoping to get an extra 10pips while risking 15 or more pips?

Don't feel bad when you get out with 10pips and see it go another 100pips. It happens sometimes, but a reliable 10pips many times per day may be better than what you may need to do to also be trying to get the occasional 100pips.
 
Thank you v. much for your feedbacks, all advice is always appreciated and heeded, by me anyway, I'm so glad I found this site. Trading from home is a very lonely existence, this site makes you feel you're not quite alone! Good luck everyone!
 
Entries - Stop Marker vs Market

Dear fellow Volmanites,

From reading FPAS I got the impression that Bob recommends hitting the buy/sell button manually to enter trades. My question is, why? Wouldn't it be much easier to place buy/sell stop market orders instead? Will you not miss some of the quickest (and surest) moves by entering trades manually?

Thanks in advance!
 
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