Did Robert Hoffman really lose 312K in a single TF trade? Yikes!

[failed_trad3r]

Quote from SteveH:

I may as well post this here because it's on my mind...

Bob Volman has written a very thoughtful and approachable book on price action trading called "Forex Price Action Scalping". Like me, most people are probably finding out about it as a cross reference on Amazon from one of the new Brooks books.

He trades the EUR/USD Forex pair on a 70 tick chart with a 10 pip initial 1:1 risk/reward basis with the avg stop more like 6 pips over 100's of trades. There's some overlap with what Brooks does without the detailed naming conventions he uses and not so much intensity in his analysis on a per bar and per chart basis.

I wish that this book had been published at the time of Al's first book and had read this one first. It's not dense and yet it's not full of "filler pages" either. For me it hits the right balance of content before moving on to the next setup (7 fully explained setups in all). If I can sit down in one reading session and get through almost 1/3rd of the book without feeling tired and/or confused, that means the writer has grabbed my attention and the pacing is excellent.

If you're new to trading, don't be put off by the trading instrument or the speed of his favorite scalping chart. You can always trade something else and on a slower chart and the basic principles being taught still apply.

I thought it was a pleasant coincidence that Bob also likes a clean candle chart with just a 20 ema on it as Al also prefers. There you go: two independent, highly experienced traders who come to a lot of common conclusions based on their detailed study of price action.

I give Bob the edge for clarity of explanation when he talks about passing on his setups because the context of the trade (i.e., up, down, sideways) isn't quite right. I give Al the edge in putting across the major observations about two-legged pullbacks, measured moves and when to expect them. Brooks is *way* more involved in the bar-by-bar analysis of price action than Volman and you do get some gems coming from such detailed study.

and he has backtested the 7 set-ups? Or are they just dime in a dozen set-ups that you can find everywhere on the web that nobody knows whether they work?

 

[italian_trader]

Quote from meltedcandles:

I spent some time paging through Volman's book and he seems to be the real deal. He is clearly a better writer than Al and the book is almost enjoyable.

Didn't read Al books, but Volman's work seems interesting and straightforward.
Naked price and 20EMA. Technical stops and easily reachable price targets. Nevertheless he doesn't mention at all any consideration about larger timeframes. Therefore his scalping can't be defined purely "trend following", I would rather say "EMA slope following"

 

[NoDoji]

Quote from italian_trader:

Quote from meltedcandles:

I spent some time paging through Volman's book and he seems to be the real deal. He is clearly a better writer than Al and the book is almost enjoyable.

Didn't read Al books, but Volman's work seems interesting and straightforward.
Naked price and 20EMA. Technical stops and easily reachable price targets. Nevertheless he doesn't mention at all any consideration about larger timeframes. Therefore his scalping can't be defined purely "trend following", I would rather say "EMA slope following"

I'm into the meat of the book now as well. His 70-tick chart for FX is nearly identical to the 1-min I use with CL. 5-min is my main time frame, but I've been using the 1-min for a while now to get into a trending move-in-progress or re-enter a trending move again and again all the way up or down (I rarely hold through retraces).

I agree his book is much easier to read and his writing style is precise and humorously intellectual ("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 ride? Are they self-indulgent masochists, suicidal maniacs, utterly mad?")

Yesterday I had a nice late day scalping trade (my scalp is 20 CL ticks; Volman shoots for 10 pips with FX) using the 1-min chart and the first setup described in his book. The 5-min chart PA was pretty sloppy, but drilling down into Volman's world there's plenty of opportunity and he presents it well.

Thumbs up and thanks, SteveH!

 

[NoDoji]

Quote from italian_trader:

Quote from meltedcandles:

Therefore his scalping can't be defined purely "trend following", I would rather say "EMA slope following"

For my intraday and swing trading purposes, I define a trend in any short term time frame (tick charts through daily charts) as 20EMA slope following.

 

[FreakofNature]

Quote from NoDoji:

For my intraday and swing trading purposes, I define a trend in any short term time frame (tick charts through daily charts) as 20EMA slope following.

I find it hard to trust the 20EMA on the 5min chart because it's so constantly changing.

Sometimes its trending and it bends it hard, other times its trending and it bends it because it was to consolidate, other times it just wants to reverse the trend.

So unreliable Im not sure how you traders can use it profitably.

 

[meltedcandles]

For most traders who have studied Al Brooks and are acquainted with his primary setups (i.e. "Best Trades") there probably isn't a whole lot to learn from the book. Volman discusses 7 setups and each have their own chapter. I've gotten through the three chapters on trends and 2 of the 3 setups are H1/L1 (referred to as First Break (FB)) and H2/L2 (Second Break (SB)).

The one thing that Volman has convinced me to do is experiment with tick charts instead of 5-minute charts. On the ES, going below lets say 500 ticks is a recipe for disaster, but on less liquid instruments like 6E, 6B and CL you could easily pull off the 70 tick or 133 tick. Whether or not I'll continue to play in the smaller timeframes remains to be seen, but I am going to give it a shot.

For those of us who have learned a lot from Al, Volman's book will be a relatively quick read and you might get a nugget or two.

Quote from NoDoji:

I agree his book is much easier to read and his writing style is precise and humorously intellectual ("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 ride? Are they self-indulgent masochists, suicidal maniacs, utterly mad?")

 

[NoDoji]

Quote from FreakofNature:

I find it hard to trust the 20EMA on the 5min chart because it's so constantly changing.

Sometimes its trending and it bends it hard, other times its trending and it bends it because it was to consolidate, other times it just wants to reverse the trend.

So unreliable Im not sure how you traders can use it profitably.

The 20EMA on the 5-min chart is the weakest of the S/R levels I use in my trade decisions. A 20-period EMA on the 1-min chart is far more useful in conjunction with the bigger picture of the 5-min chart.

In the 5-min time frame, the strongest level for me to pay attention to is the trend line, the next strongest level for me is the previous S/R level in play, and finally the parallel channel line. The 20EMA in no way serves as a trade entry level. If the 20EMA coincides with the trend line, I'm all over it; if not then it carries little weight for me until it's tested twice and holds, in which case I use a smaller time frame (1-min) for trade entry.

 

[FreakofNature]

Quote from NoDoji:

The 20EMA on the 5-min chart is the weakest of the S/R levels I use in my trade decisions. A 20-period EMA on the 1-min chart is far more useful in conjunction with the bigger picture of the 5-min chart.ed

In the 5-min time frame, the strongest level for me to pay attention to is the trend line, the next strongest level for me is the previous S/R level in play, and finally the parallel channel line. The 20EMA in no way serves as a trade entry level. If the 20EMA coincides with the trend line, I'm all over it; if not then it carries little weight for me until it's tested twice and holds, in which case I use a smaller time frame (1-min) for trade entry.

I will study what you mention.

Your commitment to helping newbies never ceases to amaze me.

I take my hat off ND.

FoN

 

[FreakofNature]

Quote from NoDoji:

The 20EMA on the 5-min chart is the weakest of the S/R levels I use in my trade decisions. A 20-period EMA on the 1-min chart is far more useful in conjunction with the bigger picture of the 5-min chart.

In the 5-min time frame, the strongest level for me to pay attention to is the trend line, the next strongest level for me is the previous S/R level in play, and finally the parallel channel line. The 20EMA in no way serves as a trade entry level. If the 20EMA coincides with the trend line, I'm all over it; if not then it carries little weight for me until it's tested twice and holds, in which case I use a smaller time frame (1-min) for trade entry.

NoDoji,

Could you please explain give some example as to how is it that you use the 1min chart with the 20ema? Thank you

 

[NoDoji]

Quote from FreakofNature:

NoDoji,

Could you please explain give some example as to how is it that you use the 1min chart with the 20ema? Thank you

I posted an example some time ago on Metal's excellent thread:

http://www.elitetrader.com/vb/showthread.php?s=&threadid=220303&perpage=10&pagenumber=2

Volman's book is all about the 20 EMA on a scalping time frame (70 ticks for his FX trading, 1-min for my CL trading).

ADD: Notice how on the chart in that thread I waited for the 5-min 20 EMA to be tested twice and the LH was my confirmation of high probability continuation of the previous downtrend. The 1-min chart offered me the sell stop entry ensuring that price itself (not my opinion) triggered my trade entry.