Bob volman price action scalping pdf download

In fact, had the three dojis from the skipped setup at the end of the chart 8 shown up in the area of the first setup 3 , similarly a bit above the average, then trading a break of them to the downside should have been administered without hesitation. So, in other words, the reason for skipping the DD short trade is not necessarily the fact that the doji bars display themselves on top of the average, but more that they do so in combination with a couple of other hints that could be interpreted as warning signs that the current downtrend may be coming to a temporary hold.

All the more reason to fully exploit the opportunities when they are offered on the proverbial silver platter. Both setups here are quite self-explanatory. Four tiny dojis, gently nestling in the average, three of them with equal highs-if that doesn't spell a great opportunity, then what does. The second pattern 2 , though much higher up in the trend, still provides an excellent opportunity to reap some more profits from this generous market.

The fact that the trend was already 50 pip underway does not in any way diminish its longevity prospect. At least not from a technical perspective. If that trade does not work out, then that is okay. What would not be okay, is a scalper being affected by it. When prices reside above a horizontal level a support zone and then finally break through it by a number of pip, the market has a strong tendency to climb back up to that former support level to touch it from below.

This is technically called testing the breakout zone, and it is very likely to be welcomed by traders on the sidelines, for these higher prices now give them more favorable odds to start shorting the market. This principle is equally capitalized on if it is not a level of support that cracks to the downside but a horizontal level of resistance that cracks to the upside and is then tested back.

In fact, one could say that all the market ever does is cracking and testing support and resistance, even on the tiniest of scales. Pullbacks, for instance, quite often have their bottoms or tops acting as a test of some former resistance or support level. So, as much as we think the 20ema is stopping the pullback in its tracks, in many cases, it is the former price action a bit to the left that is either offering support or showing resistance.

Countertrend 52 www. In most instances, it won't take long for them to see the folly of it because no matter how you look it, they present their opponents, those that did not trade the initial break for whatever reason, with more favorable levels to trade from. Of course, either party could win in any kind of battle, but it in the long run it will pay off to not trade against a trend, nor against a proper horizontal break, for that matter.

Take a look at the two bars in the 20ema zone at the end of the chart 2. They provide a good example of when to ignore a setup that under other circumstances may have been tradable.

First of all, the second bar, the black bodied one, is not really a doji, but still it is attractively bearish price closed in the lower region of the bar and not overly tall.

So, seeing this two-bar pattern appear in the 20ema, we could basically regard it as a proper DD short setup. Because the DD bars, compared to the overall length of the price bars preceding them, in both trend and pullback, are not compressed at all.

In fact, they both are about the biggest bars in the neighborhood. One could argue, and rightly so, that a break of the DD did not materialize until two new, and this time little dojis underneath the average were broken by a third candle a few minutes later 3. Even so, with the entry on this trade almost equaling the low of the pullback and the overall price action quite slow and subdued, it is recommended to not engage in a short at this point in time.

Note: It may be interesting to contemplate for a moment the reason why any trader would want to buy or sell something at any moment in time. After all, even if the value of the underlying instrument was to be accurately estimated, it is highly unimaginable, if not plainly impossible, for anyone to be able to put an absolute price tag on it. At the end of the day, value is nothing more than a perception in the eye of the beholder. And price a mere reflection of consensual appraisal of many.

The more obscure and unfathomable the underlying instrument, the crazier the notion that the average trader would be qualified to make 53 www. Trading currencies by the trillions just about tops the list of daily irrational behaviors, for there is no way a mere mortal would be able to make sense of the many global Powers That Be on a fundamental basis.

With that in mind, how is it possible that a trader would be able to trade anything at all, and walk away with consistent profits to boot? The answer to that is simply that the smart trader does not trade the underlying instrument, he trades other traders. And more so, he trades their pain and incompetence. He trades the fact that they have to react to their many mistakes to protect themselves.

He exploits predicament and agony, all of it highly visible on a technical chart. To exploit others more than being exploited himself should be the ultimate satisfaction of any trader who is not in this business out of philanthropic idealism or to indulge in masochistic tendencies. ProRealTime,com eurfusd 70 tick IFig 7.

Then formed a classic pullback eating back about 40 percent of the move, stalling into the 20ema 1. Two nice little dojis, both no more than 2 pip tall and with identical lows, presented a patient scalper with a safe opportunity to enter the market short once the lows were broken.

This tick counter will appear on the vertical axis of the price chart and counts down the number of ticks per bar in these charts from 70 to zero , and then starts all over again in a new bar.

Why is this handy? Quite often , a signal bar will show a closing price a t one o f its extremes; should a trade have to be entered on a break of this bar, chances are that this trigger may be presented right on the first tick of the next bar in case this entry bar opens with a one pip gap.

A gap is the difference between the closing price of one bar and the opening price of the next. Although most new bars will show an opening price equal to the previous close, gaps do occur quite frequently, and particularly in setup situations, where the price action could be a bit jumpy. A scalper, not alert enough to act on an entry bar that takes out a signal bar, runs a risk of missing his trade.

Surprises are not uncommon, even to the focused, which is why it is good to keep track of the signal bar's lifespan. Hence the very handy tick counter. It also works the other way around, by helping a trader to relax a bit when there are still quite a number of ticks to go in a particular bar of interest. The second DD setup broke about fifteen minutes later 2. With both trend and pullback of very fine, almost harmonious quality trend bars all bearish, pullback bars all bullish , it was safe to anticipate the market to fall further still.

A small discomfort had to be weathered when, two bars after the break, prices briefly pierced the average a bit. That's all part and parcel of trading.

A trader cannot expect the market to not put up a fight. As long as that fight remains within the boundaries of his risk profile as will be discussed later on , the scalper has no option but to stand pat and see what happens. In any case, it's only a trade. Trade or skip? Technically, it is a DD pattern in the 20ema at the possible end of a diagonal pullback. However, it has three things 55 www. Prices did halt nicely, though, in the resistance of the previous DD setup's signal line.

Still, a conservative scalper would probably decline this offer. But we couldn't really argue with a more aggressive individual having a go at it. Always wait for the proper setup to be broken before entering, no matter how much you can already picture prices to move a certain way. Expectation and bias are terrible companions to put faith in. When presented with a group of four or five neighboring dojis, like setups 1 and 2 , all with equal extremes, it can be tempting to already fire an order to the trend-side of the market without waiting for the setup to be actually broken.

Such can be the anxiety of anticipation or greed. But not being able to wait for a true break to materialize is 56 www. Quite ironically, the irp. Of course, from an educational viewpoint that is an excellent reprimand.

Another thing that might help to avoid this kind of behavior, is to ask oneself what exactly is gained by front-running a break. In case the anticipated continuation of the trend indeed emerges, then, in the event of a profitable trade, the standard entry would have probably delivered the same 1 0 pip profit.

So little gain there. In case the trade did not set itself up as a tradable event, because the break never materialized, the scalper actually loses out due to his own impatience, maybe so much as by having to close out this non-trade for a 5 pip loss a scratch. Is it worth it, one may ponder. The first DD setup 1 consisted of no less than four neighboring dojis, all sharing equal highs. Patiently waiting for the break of the highs is always the proper thing to do.

Note: Next to the trend being obvious here, alert traders could also anticipate further price advance by keeping track of the round number zone of 1. The currency chart is full of round numbers the last two digits ending at 00, 1 0 , 20, 30 etc but two zones in particular stand out on any currency pair as being the most relevant: the level and the leve1 round number zones the half cent and full cent levels.

Bear in mind, these are zones, not actual pip levels, so when they get breached, even by a fair amount of pip, they could still hold up as support or resistance we will take on this phenomenon in more detail in the Range Break chapters. Big 57 www.

Trading can be rather thin when prices approach these zones, meaning that a lot of traders prefer to stay on the sidelines to await how the market handles these major levels. This can show a very peculiar side-effect of prices being literally drawn towards these round number levels, simply because there are not too many traders standing in the path of them. What will happen when these round numbers are hit is impossible to tell, but before impact has taken place, prices tend to be sucked straight towards them.

We will refer to it as the vacuum effect. In case of a proven trend, it is not necessary to be intimidated by these round numbers.

They are easily breached enough for a trade to still finish profitably. What's more, it is fair to assume that a number of stop-loss orders will reside beyond these obvious levels and once hit they may even help a trade along. Still, when it comes to the DD setup, it may pay off to be a bit more conservative when contemplating a possible trade straight into a round number level.

And participation in the round number zones may just be too thin to call a break of the DD setup a high probability trade. Some of the other setups are better suited to take on these situations, because they really build themselves up. For example, the second D D setup at 2 is of inferior quality when compared to the first 1. Not only is the round number zone of 1. Any cluster of price bars nearby on a level higher than a long entry, or on a level lower than a short entry, is likely to represent resistance.

It would depend on the 58 www. So, it would be best to see if there are some other signs pointing either in favor of the trade or against it. Quite often, determining whether to step in or not, weighing the pros and cons, can be a delicate proposition.

For example, some might argue that the price action preceding the first DD setup is also of the clustering kind. Still, I would not hesitate one moment to fire off that trade. Sometimes it is hard to explain, because the differences seem so subtle; but I would not go so far as to suggest that gut feel has anything to do with it. At all times, the decisions should be based on technical grounds.

The third DD setup 3 is even worse than the skipped second. The entry price may be more economical, since it is lower in the chart, but way more important than that is what lies above it on the path to target. The clustering price action below that round number is clearly blocking the path, so it is best to not risk capital on this trade. Prices actually ran through it without any trouble, but that is totally irrelevant.

Scalping is all about probability, not about outcomes. How hard is it to trade these sort of setups? Not hard at all, one would think. As a nice 59 www. The more distinctive the trend before the pullback, the more the one after it is likely to mirror the first.

How about the DD setup about twelve minutes later 3? Had the pullback preceding it been more straightforward and more diagonal, like the one leading up to the first D D , then this setup, too, would have been quite tradable. Shorting a break of the DD pattern from the perspective of the overall pressure is essentially the proper thing to do, if not for the fact that prices now face the troublesome task of having to pave their way through chart resistance, as any horizontal cluster of bars blocking the way can be looked upon.

At this point of the journey, telling the subtle difference between a proper setup and its questionable counterpart could appear to be quite challenging; if so, it should be comforting to know that everything will fall into place soon enough.

After all, patterns, ranges, trends, minor ripples, shock waves, traps, even the freak oddity-if the seasoned trader has seen them all a thousand times before, then so too will the dedicated novice once he gets the hang of these price action principles. Once that break is set, a scalper enters with-trend to capitalize on a quick resumption of the market's original intent. In fact, in the majority of cases, a scalper may be better off skipping the trade altogether.

Despite its discretionary nature, this setup is certainly worth studying because in the right environment it produces excellent odds. The first condition concerns the trend itself. Once that break becomes a 61 www. In a downward surge we will see the chart spit out a number of black bars closing on their lows; in an upward surge, a number of white bars closing on their highs. By the looks of these sudden moves, or spikes as they are often called, it can safely be derived that the current action is not just a reflection of tiny scalpers stepping in and out but that the bigger time frame participants are also involved in them.

The second condition deals with the shape of the pullback that tries to counter this flurry of one-directional activity. Nothing ever climbs or falls in a straight line, so even an aggressive move sooner or later will find the notorious countertrend traders on its path. Logically, seeing these new players come in against the trend, a number of with-trend players will quickly start to pocket some profits.

Not necessarily equally strong as the move it is trying to counter, but definitely not as a weak attempt either. Preferably, the candles in the pullback are also one-directional in their closes, meaning that if the trend was down, printing black bodied candles, this pullback will have mostly white bodied candles in it. And it should not stop or falter in its run before the area of the 20ema is reached. Take heed of the word area, because when the trend is formed by only a few very tall bars that broke free from a consolidation zone, the moving average may be lagging behind and thus be out of reach, even to a substantial pullback.

At other times, the pullback itself is so violent that it might easily perforate the average more than it normally would before calming down. So the 20ema is a guide, not a barrier. When both required conditions are met-a strong trending surge and a firm straight pullback in it-the chart will show a very visible fishhook pattern. Most of the time, the pullback hook will not exceed the halfway mark of the trend, although it is not exceptional to see a retracement even further than that.

The third and last condition to grant the FB setup validity is that the 62 www. The first pullback in any newborn trend is highly prone to be slammed back itself by with-trend traders the very moment it stalls. By now a very legitimate question may have arisen among readers trying to figure out the logic behind some of the price action principles already discussed: what is it with these countertrend traders, what makes them so persistent in their need to constantly swim against the tide?

Are they self-indulgent masochists, suicidal maniacs, utterly mad? Can't they tell when a trend is on and don't they know the odds are technically in favor of the trend to continue? To answer these questions we may have to ask another. What is a trend to begin with? We may perceive our trend to be so obvious that even a novice could spot it a mile off, but still the move itself may only be a minor ripple in the trend on a bigger time frame.

And this other trend, in turn, may simply be a pullback in an even bigger trend. This pattern of hierarchy could even go on until we're looking at the monthly charts and beyond. So who is actually countering who at any given moment in time? There is no feasible answer to this riddle. That is why trading is such a fascinating clash of opposing ideas and insights.

It is this perpetual disagreement on price and value that causes the market to provide endless liquidity to all participants involved. And luckily so, or there wouldn't be any trading done. Just imagine a market where everybody would agree. Who would be so generous to sell us a contract should we want to go long, or buy our contract should we want to go short?

Nobody would. Everything else is irrelevant. That one chart is the frame in which to decide whether the market is trending, ranging or pulling back, and any decision to enter or exit the market should be based on the setups and the candles in that chart alone.

Keep the three required conditions in mind: a bursting move, a straight pullback, the first pullback to the move. Although not necessary, it can be a nice bonus to see the candle that needs to be broken the signal bar turn out to be a full-grown doji, with its closing price very close to the side of the break.

When it closes back on its lows in a downtrend, it hands us a strong signal that the trend may be about to resume.

But basically any candle in this setup will do. They should not be any taller than 7 pip, though, in order for us to still be able to wrap a 1 0 pip stop around them 7 pip for the candle, 2 pip for the break on either side, and 1 pip to account for the spread. More on this in Section 3 on Trade Management.

Note how most of the bars in the downswing are firm black bodied candles, whereas those in the pullback are all smaller in size, yet none- 64 www. Not even one bar in the pullback got broken to the downside until the signal bar in the 20ema appeared. One couldn't ask for a better FB setup.

Technically, this particular FB is also a D D setup. After all, there are two dojis-with equal lows-appearing in the 20ema. That would render the necessity of the pullback to be the first a non-issue, because now a scalper could simply trade a DD setup, which does not have that kind of restriction. As we march through all of our setups in this book, we will most likely see many more examples of situations in which one setup is part of, or equal to another. The reader should not let himself be confused as to what to call it.

The names of all patterns are essentially irrelevant. The tops of most of the bars remain capped at a horizontal level, but the lows are slowly progressing upward. That is a clear sign of tension building up towards an upside break. The reader is prompted to always check the chart for any kind of clustering price action in it.

Whatever is compressed will eventually unwind, simi- 65 www. It is referred to as pre-breakout tension. The later to be discussed BB setup see Block Break, Chapter 1 0 is solely designed around this principle. But all throughout the chart, setup or not, we can expect tension to build up, one way or another. Pullbacks that retrace about 40 to 60 percent of the trend and simultaneously collide with the 20ema provide excellent opportunities for a with-trend scalp.

In this chart, it turned out to be a proper FB setup 2. However, when compared to the previous chart, Figure 8. The trend has some black bars in it, the pullback some white ones. All in all, that makes for a tradable FB. This setup provides a good example of how a tick counter can help to indicate when a signal bar is about to end and a possible entry bar about to begin. There is always the possibility that the entry bar will open with a one pip gap, which will be an immediate break of the signal bar on the first tick, and thus a valid reason to fire an order.

Hesitating in that spot may result in a worse entry price or even lead to missing the trade altogether. When using market orders instead of limit orders, it is unavoidable to occasionally incur some slippage when entering on a trade. Since a market order aims to grab the price of the moment, but has no specific price attached to it, it could be filled disadvantageously in the event of the market moving away. There are basically two reasons that could cause this to happen.

The first is a technical one, meaning the market 66 www. That happens even on the best of platforms. The second reason is self-inflicted, as a result of acting too slow. The technical reason, obviously, cannot be avoided. We will certainly not be using any limit orders and see half of our trades move away from us without being filled.

Even if we were to operate a high-tech platform that allowed us to put in limit orders at the speed of light, that would not eliminate the risk of not getting filled.

Therefore, if we want in, we hit the market order button. The self-inflicted slippage as a result of hesitating at the moment of entry is more common than one might think. Balancing on the brink of a trade can trigger a lot of anxiety within a trader's mind. As a result, some will act prematurely without waiting for a proper break; others simply act too slow and some may not act at all.

These things happen and they are only natural. It may take many months for a trader to routinely fire off his trades without the slightest sense of discomfort. A thing to strive for, of course, is to act when action is required, whether that still provokes anxiety or not.

Eventually all these feelings will wear off. Most winning trades surpass the 1 0 pip target without too much trouble, so even being filled uneconomically, and thus having a target objective a little further out by the same amount the entry got slipped by , should not make that much difference.

It may cause the damage control to be more expensive, though-so be it. Still, that is no reason to get upset. Nothing in the market ever is. Should a trade be missed, for whatever reason, it is important not to whine over it but to quickly adapt and see if the situation can still be saved.

Just as often as the market tends to shoot off and not look back, it shows a tendency to stall right after the break. And even if it spikes away without us in it, in many instances, just a few bars later, price will quickly pull back to revisit the breakout level.

Both situations pro- 67 www. We may even be dealt the exact same price as the original missed entry. However, in case a trade is truly missed and does not pull back, it is essential to not chase price up or down, no matter how much a scalper wants in. That is very poor trading and reeks of amateurism. If the moment is really gone, it's gone and a scalper moves on. IFig 8.

Price action like this is very often caused by traders responding to a news release. The fact that it also broke a technical pattern 1 -2 , a so-called bulljZag, don't worry about it and cracked a round number zone 1. Whenever a trader sees something like this happen on his chart, he should immediately think: FB!

For that is the fastest entry into a new trend after a pullback 4. This is typical for sharp moves that contain only a few very long bars. The average may have an exponential calculation to it, which puts more weight to the most recent closing prices, it is still an average made up of the closing prices of the last 20 bars, and at the end of the 68 www. This is why the 20ema can only act as a visual aid and not as a definitive level that needs to be touched first.

A handy trick to determine whether a FB entry may be imminent in situations like this is to watch out for an opposite colored bar to get printed in the pullback could also be a doji without a colored body. In this example the pullback is bearish, with the candle bodies being black; the moment a white bodied candle appears, the scalper may be dealing with a possible signal bar. But only once the high of that bar gets taken out does it signal an entry to go long. This is only a handy aid, though, because by itself the color of the signal bar is irrelevant.

Any bar in this setup that gets broken in the direction of the trend should be considered a valid signal bar. The time scale below this chart gives the reader a good impression of the occasional huge difference between a tick frame and a time frame chart. That is about 1 3 times as fast. Shock effects, like news releases, can be extremely volatile and fast paced, but with a bit of luck, an alert scalper may still reap some profits from them before they wear off. It is not uncommon for a target to be reached within a matter of seconds.

To the downside, it should be noted, there is the possibility of being stopped out equally fast. Under calm conditions, it is quite rare for a full stop of 1 0 pip to be hit, yet it is a market like the second half of Figure 8.

The following is among the preferred booklet I please read on foreign exchange together with As i recommend the idea. What else to Search: bob volman book PDF. His TP is 10 pips and SL 10 pips. Developed the 7 set ups such as the Doji Break, First Break, so on and so forth. Trading completely naked without any indicator, no trendline —but only 20 EMA. Virtually no Trades to do now nevertheless they had a few overlooked people.

S1: Overlooked IRB arrange. That graph or chart begins which includes a moderate downtrend, and bulls insert several pip previously mentioned that sixty stage.