I want to make sure everyone sees the collection of charts that Bob Volman annotated for BLS, I think this is very important to see how truly flexible Volman is.
I think if you approach Volman’s style with a mechanical mindset or pattern-based mindset. You are sort of barking up the wrong tree. For example, if you find yourself thinking “O.K. here are two small doji’s near the EMA”…then I’m going long…like a Robot who was taught simple pattern recognition. You will find yourself in so many bad DD trades you will think this setup is total bullshit.
I think what Volman is trying to teach in the end is how to get into trades only when the underlying conditions are supporting the trade.
As you can see from the charts, Volman is mad flexible of where he draws boxes. Where he see’s buildup. Where he sees conditions that support a play. Where he sees danger on the horizon. This flexibility is pretty hard to teach. And would take thousands of hours to feel comfortable that you are doing it correctly.
I’m pretty sure Volman has actually spent many hours trying to teach others his style, even before writing his book. And he probably has had some students who were able to finally get it down, and I’m sure there were others which continued to struggle.
Teaching about “Context” is a slippery subject. The moment you try to define it, it becomes a too rigid or set in stone. And then you have people thinking it’s only about taking a trade above two small doji’s near an EMA. Which is missing the point. If trading is both an art and science, then understanding context is closer to the “art of trading”. I’ve watched Al Brooks trade. And I’m sure you would have a similar experience watching Volman trade. There is this constant evaluation of the “possibilities”, constant weighing of pro’s and con’s that are constantly changing. Nothing is “set” with this mindset. It’s all relative to whats happened just before it.
I’m 100% certain you can make money using mechanical trading, and I’m certain you can make money with a solid discretionary framework. I’ve even helped program arbitrage style systems and I’ve seen those work as well. I think the main difference is you can be alot more profitable (percentage-wise) with a solid discretionary framework, but it will take a lot more time learning the “soft skills”.
What do I mean “soft skills”?
I’m stealing this phase from Daniel Coyle, but I think it’s very important to understand it, if you are going to be successful with this trading style.
Here is an article that will help you understand.
5. Figure out if it’s a hard skill or a soft skill
Every skill falls into one of two categories: hard skills and soft skills. Hard, high-precision skills are actions that are performed as correctly and consistently as possible, every time. They tend to be found in specialised pursuits – such as a tennis player serving, or any precise, repeating athletic move; a child performing times tables; a worker on an assembly line, attaching a part. Here, your goal is to build a skill that functions like a Swiss watch – reliable, exact, and performed the same way every time, automatically, without fail.
Soft, high-flexibility skills, on the other hand, are those that have many paths to a good result, not just one. These skills aren’t about doing the same thing perfectly every time, but rather about being agile and interactive; about instantly recognising patterns as they unfold and making smart, timely choices. Soft skills tend to be found in broader, less-specialised pursuits, especially those that involve communication, such as: a football player sensing a weakness in the defence and deciding to attack; a stock trader spotting a hidden opportunity; a novelist instinctively shaping the twists of a complicated plot. With these skills, we are not trying for Swiss-watch precision, but rather for the ability to quickly recognise a pattern or possibility, and to work past a complex set of obstacles.
The point of this tip is that hard skills and soft skills are different (literally, they use different structures of circuits in your brain), and thus are developed through different methods of deep practice.
When you learn a mechanical trading system, and it’s rules, and it’s money management You are learning “hard” skills.
When you learn a “discretionary” trading framework like Volman or Brooks you are learning “soft” skills. The key difference is that soft skills are alot more fluid and flexible and for that reason alot harder to “define”. Like understanding “context”.
If you try to force Volman’s setups with a the mindset that you are working on “hard” skills you are applying the wrong mindset to becoming successful with this style.
I think the key difference between newbies is that they think trading is only about “hard skills” and if they only find the right combination of indicators, oscillators, or even “price action” pattern-based setups then they will be successful. They never pay attention to the overall “context” of the play they are considering, never asking why the same setup is favorable in one environment and unfavorable in different environment.
This might be a bad example, but I see alot of parallels between the seduction community and the retail trader community. It sometimes boggles my mind how similar they are. If you saw your friend pick up a girl at a bar at 12:00 at night. And you asked him “what did you say to her?” And he said something like, I told her…”Wow, you have a nice ass”. Then after thinking about it, you would try to apply the same line the next day at a quiet coffee shop. Walking up to a girl and say “Wow, you have a nice ass”. Instead of getting a boisterous response that your friend got the night before, you get this almost avoidant smile from someone who is not trying to engage with you. You sort of missed the underlying context you were in the night before. A bar where the alcohol was flowing, and the music was loud, and fun was being had by all. To a quiet coffee shop where a slightly different tactic would be more fruitful to your approach. Not only that, you assumed it was some “line” or setup that made your friend successful. This is the exact mindset of a newbie trader.
To bring the example back to trading, you see how the context is missed in trading as well. For example, during a really aggressive uptrend you could start to use your DD setups loosely. But trying to use them at other times could get you into some seriously low odd plays.
I wish you all the best on your journey.