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keen246 asked: Hi, I'm reading Volman's book. I want to give the method a try. Could you please let me know the context of your experiment following the book's method? Like...did you draw S/R lines on your chart? Did you take into account possible S/R areas? What time did you usually trade? Did you always leave fix stops or moved the S/L to break even once in profit? Do you think you were aggressive or conservative when trading? Did you follow any other scalping or swing trading strateg during your experiment?

This was the first thoughtful question I’ve had in a long time.  To answer your question…I was trading mostly during the London session…I didn’t use much information other than the 2 hours shown on most charts…I tried to use Volman’s tipping point method for stop management (described toward the end of the book)…I was both conservative and aggressive (unsure, alot of the time)…Yes, I always have a few experiments brewing to try out edges or remix old ones…very similar to the process you see with this blog.

After recently reviewing the forum thread on trade2win, it seems most people have trouble gaining a level of consistency with Volman’s methods.  Many people made it to breakeven, and are hopeful to improve.  Which was a far as I could take it as well.

However, there is one person called TraderAllen who posted an outstanding record using Volmans methods.  You should probably direct future questions to him.  His consistency is what I hoped for, but was unable to attain.  So he is definitely doing something right.  Who knows…maybe a few tips from him, will help set you on the right path.

All the best.

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Final Post for Learning to Trade Like Bob Volman

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.

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Week in Review (September 24th thru September 28th)

I already posted that I will be closing down my experiment with “Learning to Trade Like Bob Volman”.  Only traded 1 day this week.  And it was a slight beatdown.  So after 9 weeks of trying to be disciplined with the setups I earned -27 pips.  Most importantly I used the smallest size possible, so it was a good learning experience.  It taught me a ton just to be in front of the market watching the smaller timeframes actively.  When I first started, I imagined trading the smaller chart (in a single chart) would be easier than it really was.  There would be a ton more I would need to learn to actually keep me out of lackluster trades, and after viewing trades from Volman that BLS posted, it really shows me there is lightyears of difference with Volman and his ability to be flexible and read what is happening on the smaller timeframe.  He also has an amazing ability to stay out of trouble, which would take me a very long time to learn without trading right next to him under intensive tutalage.  I wish everyone all the best learning this style,  it was definitely worthwhile for me.

Monday, no trades

Tuesday, no trades

Wednesday, -4, -4, -5, -5, -3 

Thursday, no trades

Friday, no trades

Total for week -21 pips

Week 1, +4 pips

Week 2, +7 pips

Week 3, -26 pips

Week 4, +10 pips

Week 5, +6 pips

Week 6, +2 pips

Week 7, +8 pips

Week 8, -17 pips

Week 9, -21 pips

Weekly Total -27 pips

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Closing Blog

I think by the end of this week I’ll be wrapping up my 4 month experiment with “Learning to Trade like Bob Volman”.  In the end, I wasn’t able to gain an edge using Volman’s style.  This is no fault to Volman, because he wrote a brilliant book aiming to lay down a discretionary framework to think about the markets and make trading decisions within that framework.

I think when you start trading you are looking for “the best way to trade”…or “the answer”…”the solution to the trading problem”…almost in the same way that alot of the early traditional education has this really strange setup…where there is this authoritarian teacher with a book with the correct answers standing in the front of class.  You just want someone to “give you the answer” and “tell you what’s right”.

Instead of a more natural approach where the teacher acts only as a guide and assistant where students discover the material at their own pace and in their own way.  Which is how you will have to solve anything, beyond the environment of school where you work on problems that don’t have defined answers.  There are always many solutions.

In the same way, trading is in many ways like life.  There are guidelines you can pickup.  Some general principles that might fit your personality.  But there are no correct answers.  If something works for you, then rock that.  If something just doesn’t fit, you can drop it. It’s O.K. there are no correct answers.  You can fit and adjust what is working based on your results in the real world.

This last week I was at the bookstore and saw the first market wizards book.  Cracked it immediately open to Ed Seykota (pg. 68)  interview Where Schwager asks, “Don’t all traders want to win?”.  His answer always surprised me.  Then Schwager asks, “Surely, some people lose because they lack skill, even though they really want to win?” to which Seykota responds:

It is a happy circumstance that when nature gives us a true burning desires, she also gives us the means to satisfy them.  Those who want to win and lack skill can get someone with skill to help them.

In my first and only correspondence with Bob Volman, one of the things he said was:

Bear in mind, there is no one way to trade the markets and if you are naturally aggresively inclined, you may find my approach at times a bit on the conservative side.

I think it’s really important to find a style that fits you.  Do not hesitate to try Volman’s style because of my experience, my personality and temperament might be totally different from yours.  If you give something a good effort you will start finding things that fit.  It could be any style, as long as you keep your size small while figuring out if you have an edge… you have nothing to lose, and only experience to gain.

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RB Long Setup (Trade #5, 2012-09-26, Wednesday)
Result -3 pips
Out of all the trades I took this was most solid (or the most like a picture perfect textbook setup).   The rest were rather lackluster and very debatable on their level of worthiness.  This was the only trade I probably should have taken.  Probably my worst day with this style.
Tipping point saved some pips, but the bulls couldn’t muster enough to break through.

RB Long Setup (Trade #5, 2012-09-26, Wednesday)

Result -3 pips

Out of all the trades I took this was most solid (or the most like a picture perfect textbook setup).   The rest were rather lackluster and very debatable on their level of worthiness.  This was the only trade I probably should have taken.  Probably my worst day with this style.

Tipping point saved some pips, but the bulls couldn’t muster enough to break through.

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SB Short Setup (Trade #4, 2012-09-26, Wednesday)
Result -5 pips
Tried to play an SB short, but the 40-Level was too strong.  It actually pulled back into the range somewhat, and I probably should have only played it if it was below the range.  Using the range as wind at my back.  Essentially I was still playing inside the range, betting that the trend would continue.

SB Short Setup (Trade #4, 2012-09-26, Wednesday)

Result -5 pips

Tried to play an SB short, but the 40-Level was too strong.  It actually pulled back into the range somewhat, and I probably should have only played it if it was below the range.  Using the range as wind at my back.  Essentially I was still playing inside the range, betting that the trend would continue.


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BB Long Setup (Trade #3, 2012-09-26, Wednesday)
Result -5 pips
Again I retry in going long.  Tried to get into this deep BB pullback.  The trend doesn’t look strong now, but I thought it was worth a try…since it broke the lows of the range barrier, and made a decent push through the top of it.

BB Long Setup (Trade #3, 2012-09-26, Wednesday)

Result -5 pips

Again I retry in going long.  Tried to get into this deep BB pullback.  The trend doesn’t look strong now, but I thought it was worth a try…since it broke the lows of the range barrier, and made a decent push through the top of it.

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ARB Long Setup (Trade #2, 2012-09-26, Wednesday)
Result -4 pips
Same idea after we broke out of the previous range.  I was thinking I could get a low risk entry with the ARB Long.  Same Result.  I was playing these ARB’s a little too loose.  The biggest problem is that I was playing a range barrier in my head.  And not the real range barrier on the chart.  If I had drawn the real line it wouldn’t have looked like much of a break out.  Plus price was dipping deep into the “ceiling level”.  Definitely a little sloppy.  Trying to push onto the market the play I wanted to happen.

ARB Long Setup (Trade #2, 2012-09-26, Wednesday)

Result -4 pips

Same idea after we broke out of the previous range.  I was thinking I could get a low risk entry with the ARB Long.  Same Result.  I was playing these ARB’s a little too loose.  The biggest problem is that I was playing a range barrier in my head.  And not the real range barrier on the chart.  If I had drawn the real line it wouldn’t have looked like much of a break out.  Plus price was dipping deep into the “ceiling level”.  Definitely a little sloppy.  Trying to push onto the market the play I wanted to happen.

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ARB Long Setup (Trade #1, 2012-09-26, Wednesday)
Result -4 pips
The breakout was too weak to take, but I felt like the underlying pressure was with me.  And was hoping for a slow grind higher.  Should have definitely looked for better buildup.

ARB Long Setup (Trade #1, 2012-09-26, Wednesday)

Result -4 pips

The breakout was too weak to take, but I felt like the underlying pressure was with me.  And was hoping for a slow grind higher.  Should have definitely looked for better buildup.

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Week in Review (September 17th thru September 21st)

Started off well, but had some issues with conflicting orders that caused some software terminal issues that I wasn’t aware of.  I got that sorted out now.  Not the best week here, but I felt good about the trades I’m selecting other than the last one.  That was just pure emotional trading.  I enjoyed watching the markets this week even though my results on this blog don’t really show it.  Just felt like the pace picked up compared to other weeks.  We will see what next week brings.  I would like to see if I can put 4 consecutive profitable days on the board, just to see if I can do it using this style.

Monday, +0, +10, -5

Tuesday, -4, -3, +10

Wednesday, no trades 

Thursday, no trades (+10 software error)

Friday, -5, -10 (+0 software error), -10 (revenge trading) 

Total for week -17 pips

Week 1, +4 pips

Week 2, +7 pips

Week 3, -26 pips

Week 4, +10 pips

Week 5, +6 pips

Week 6, +2 pips

Week 7, +8 pips

Week 8, -17 pips

Weekly Total -6 pips

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Pure Gambling/Boredom/Frustrated Short Setup (Trade #3, 2012-09-21, Friday)
Result -9 pips
I broke all rules on this trade.  I trade right into some seriously unfavorable conditions.  I was bored and tired.  And I brought my frustrations from the last error of the last trade into this one.  This is not a Volman setup at all, but it is a good example of how switching to revenge/gambling mode never pays…and almost always increases the damage already done.
I rationalized myself into this trade by making a Wild Ass Guess that the 80-Level would break…and then got myself into trade that had alot of unfavorable conditions working against it.
It shows how powerful your emotiions can be, where you are totally blinded to all the information right in front of your eyes.  All you want is your revenge.  But in the end I just compounded the damage.  
Good lesson to see on how pure Emotional Trading happens, how the downward spiral can start.  Called it a day after this trade, would have just done more damage.  The good thing is that I think i figured out why this software error is happening, which is the most important thing.

Pure Gambling/Boredom/Frustrated Short Setup (Trade #3, 2012-09-21, Friday)

Result -9 pips

I broke all rules on this trade.  I trade right into some seriously unfavorable conditions.  I was bored and tired.  And I brought my frustrations from the last error of the last trade into this one.  This is not a Volman setup at all, but it is a good example of how switching to revenge/gambling mode never pays…and almost always increases the damage already done.

I rationalized myself into this trade by making a Wild Ass Guess that the 80-Level would break…and then got myself into trade that had alot of unfavorable conditions working against it.

It shows how powerful your emotiions can be, where you are totally blinded to all the information right in front of your eyes.  All you want is your revenge.  But in the end I just compounded the damage.  

Good lesson to see on how pure Emotional Trading happens, how the downward spiral can start.  Called it a day after this trade, would have just done more damage.  The good thing is that I think i figured out why this software error is happening, which is the most important thing.

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BB Short Setup (Trade #2, 2012-09-21, Friday)
Result -10 pips
Bulls started to show some life after long pullback from the highs.  I felt like i had some room before the really strong resistance area.  But price struggled to break the SB midpoint high.  So I tried to scratch the trade at breakeven.  However, my terminal gave me the same error as the other day.  I think I figured out why that is happening, but it was still aggravating to take a full stop on what should have been a scratch trade.  Unfortunately, I brought this aggravation into my next trade which you will see.  Switched to Gambling/Revenge/Boredom mode.  But I think now I have the issue resolved with why this is happening.  And it should happen again.  If anything its a good lesson about why the emergency stop is always in place.  And a good lesson of how emotions from one trade can carry over to other trades, starting a downward spiral.

BB Short Setup (Trade #2, 2012-09-21, Friday)

Result -10 pips

Bulls started to show some life after long pullback from the highs.  I felt like i had some room before the really strong resistance area.  But price struggled to break the SB midpoint high.  So I tried to scratch the trade at breakeven.  However, my terminal gave me the same error as the other day.  I think I figured out why that is happening, but it was still aggravating to take a full stop on what should have been a scratch trade.  Unfortunately, I brought this aggravation into my next trade which you will see.  Switched to Gambling/Revenge/Boredom mode.  But I think now I have the issue resolved with why this is happening.  And it should happen again.  If anything its a good lesson about why the emergency stop is always in place.  And a good lesson of how emotions from one trade can carry over to other trades, starting a downward spiral.

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BB Short Setup (Trade #1, 2012-09-21, Friday)
Result -5 pips
Tried to get in to BB after price pulled back to support in previously strong uptrend.  It had trouble breaking above high, went about 6 pips in my favor…and couldn’t muster enough for a better tipping point stop.  Price sold off hard after stop.
This was a little unorthodox of a setup.  And more counter-trend than I usually try for…

BB Short Setup (Trade #1, 2012-09-21, Friday)

Result -5 pips

Tried to get in to BB after price pulled back to support in previously strong uptrend.  It had trouble breaking above high, went about 6 pips in my favor…and couldn’t muster enough for a better tipping point stop.  Price sold off hard after stop.

This was a little unorthodox of a setup.  And more counter-trend than I usually try for…

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I tried to enter a market order, to get this order…but my order was instantly canceled by my broker, for other reasons.  Not a big deal.

But this one would have been a beauty.  Very nice slow lingering pullback onto an area of technical support, with a “textbook” signal line and buildup.  I just enjoyed watching this trade setup.

Also in the forum BLS has the exact same trade, so that’s good.  I don’t think I would have caught this type of trade a few months ago.  So it feels good.

Overall, I think the Bulls made a stand at the 20-Level.  Although I didn’t know that at the time.  You could see their agenda a little better when they only let it fall by 2 pips below the “low of the day”, and then made a push back up above all the range highs in a rather quick fashion…and then held it.

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BB Short Setup (Trade #3, 2012-09-18, Tuesday)

Result +10 pips

Market slowed to a stall, started looking at higher timeframes for some guidance.  It looked like a decent area for bears to make one more push down, to see if there was any stops to be found below the low of the day.  Especially, after putting in so much work to keep it there.  Also, it was later in the day, so it seemed more like a “now or never” play.

After the bulls made a push up above the tiny congestion box…and didn’t even rise more than a pip…it probably deflated any hopes that a rally would build from here.  Bigger players probably waiting near the low of the day to buy or not.