Ivob's channels, volume, and VWAP thread (EUR/USD) | Forex Factory

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Attachments: Ivob's channels, volume, and VWAP thread (EUR/USD)
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Ivob's channels, volume, and VWAP thread (EUR/USD)

  • #1
  • First Post: Edited Oct 16, 2018 8:44am Mar 4, 2018 1:05pm | Edited Oct 16, 2018 8:44am
Hi everyone,

I've been (day)trading forex for 15 years now trading only EURUSD in the last few years.
Made all errors in the book (and its cousins) and hopped from method to method. But I never gave up, became more disciplined and eventually gained enough experience that it just had to work.

The reason for this thread is twofold.
1. I find it interesting for myself to have some kind of documentation of my own method.
2. I encountered lots of BS in my education as a trader and would like to offer something different

Apart from trades I take and my view on the market there are things I will discuss for sure:

- how do markets actually operate? How does our brain operate?
- Timing, money management and emotional control.
- The power of channels, volume, VWAP
- Interesting tricks for execution
- Some MT4 custom indicators I developed
- etc.

You will notice while we proceed that I have a completely different view on the markets and trading than what's common. For instance I do not believe in edges, statistics or profit targets. I believe in understanding the market. That is the only edge.

This will all become clear while I proceed. I invite people to ask questions and to give their own feedback.

Ivo
Trouble lies in what we believe to know for sure that just ain't so.
  • #2
  • Mar 4, 2018 1:15pm Mar 4, 2018 1:15pm
For instance I do not believe in edges, statistics or profit targets. for 1 thing trading for a living is all about what you dont believe
  • #3
  • Mar 4, 2018 1:56pm Mar 4, 2018 1:56pm
BRING IT ON !!
  • #4
  • Edited 8:37pm Mar 4, 2018 3:19pm | Edited 8:37pm
Dear Ivo,
Looking forward to your wisdom and really appreciate you taking the time to pass on some of that knowledge to avoid bs in teachings.
I still think knowing to read the markets is an edge in my opinion

Just to clarify, when I started my trading, I was trading the 1 min charts quite accurately with a complicated strategy that looked at volume. After doubling a small account, I didn't continue and found a more easier and simpler approach using higher timeframes when I understood that the volume is from my brokers clients. Without having institutional order flow and volume access I abandoned volume altogether. Even looking at vwap recently I could just not take it seriously as it was giving similar info I could get with a super trend indicator. If you can please include in your explanations on how you overcame the fact that we only see partial volume, while the real volume must be hidden from the average retail trader. Thank you in advance for the knowledge you will hopefully share.

Best Regards,
Tzamo
"Work hard, put in the effort, and follow your dreams..." -Me
  • #5
  • Edited 11:35pm Mar 4, 2018 11:25pm | Edited 11:35pm
Preflight check EUR/USD

We already moved 94 pips... passed the high of Friday where price was rejected at resistance (1.236) and fell back.
94 pips is a lot for this time of the day.. .Chances are very high for a rebound back up vs price going down whole day long.
I do not predict (or ever act on prediction) how far it will go, just anticipate on change and act on facts.
trend is down, volume is normal. Important support at 1.2250. We are not very far. Will be looking for longs there.
Strategy: will look for pt3 down below VWAP (around 1.23) but for longs around 1.225

Ivo
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 49 KB
Trouble lies in what we believe to know for sure that just ain't so.
  • #6
  • Mar 5, 2018 12:37am Mar 5, 2018 12:37am
Quoting ivob
Preflight check EUR/USD We already moved 94 pips... passed the high of Friday where price was rejected at resistance (1.236) and fell back. 94 pips is a lot for this time of the day.. .Chances are very high for a rebound back up vs price going down whole day long. I do not predict (or ever act on prediction) how far it will go, just anticipate on change and act on facts. trend is down, volume is normal. Important support at 1.2250. We are not very far. Will be looking for longs there. Strategy: will look for pt3 down below VWAP (around 1.23) but...
Hello Ivo, congrats for your new thread.
I appeciated your preflight checks on Aka's forum.
I used the volume analysis few years ago but it was on futures.
Currently I am using Oanda Uk and my volumes are different from yours.
Could you please inform which is the datafeed that gives you the volumes displayed on the charts you post.
Could you please specify also what you mean with "pt3".
Many thanks
Valter
  • #7
  • Edited 1:41am Mar 5, 2018 1:27am | Edited 1:41am
Quoting valter
{quote} Hello Ivo, congrats for your new thread. I appeciated your preflight checks on Aka's forum. I used the volume analysis few years ago but it was on futures. Currently I am using Oanda Uk and my volumes are different from yours. Could you please inform which is the datafeed that gives you the volumes displayed on the charts you post. Could you please specify also what you mean with "pt3". Many thanks Valter
Hi,

I use FXOpen Uk.. however, the volume does not need to be the same in absolute terms as long as the highs and lows are the same relatively... are they? I found them to be very similar among different brokers.

The market (all markets) moves in 1. a move, 2. retracement, 3. continuation (which may fail)

After the first 1-2-3 in this chart (black figures) I expect a second point 3 down at the shallower (red) trendline which I had already drawn. I always look for these shallower lines. I took it and then waited for volume confirmation. Then I didn't like it because we got high volume at 3rd bar but low range...right at support. This was while the bar was forming. So instead of going down it formed a point 3 up of a new channel. (red figures)
So got out but with a small profit. An appropriate action here would also have been "reverse". This is the basis of my method, shoot and then later see if it was right/confirmed. When wrong: get out with small profit, BE or small loss (when late)

After every BO (breakout) the action is "hold" and we wait for another point 3. The safest trade is to wait until after the breakout and NOT take trades at the RTL (right trendline) unless we get a failed breakout after an attempt forming a new point 3. Profits are taken at the left trendline. We think in right and left and not up and down.

Lots of info, all will be clear.
Ivo
Attached Image
Trouble lies in what we believe to know for sure that just ain't so.
  • #8
  • Mar 5, 2018 5:04am Mar 5, 2018 5:04am
Quoting ivob
{quote} Hi, I use FXOpen Uk.. however, the volume does not need to be the same in absolute terms as long as the highs and lows are the same relatively... are they? I found them to be very similar among different brokers. The market (all markets) moves in 1. a move, 2. retracement, 3. continuation (which may fail) After the first 1-2-3 in this chart (black figures) I expect a second point 3 down at the shallower (red) trendline which I had already drawn. I always look for these shallower lines. I took it and then waited for volume confirmation. Then...
Hi,
many thanks for the explanation.
About volumes I think that they are relatively similiar, I attach here a screen of M5 with LWMA 14 on volumes
Valter
Attached Image (click to enlarge)
Click to Enlarge Name: Volumes on M5 chart.png Size: 51 KB
  • #9
  • Mar 5, 2018 5:30am Mar 5, 2018 5:30am
Quoting valter
{quote} Hi, many thanks for the explanation. About volumes I think that they are relatively similiar, I attach here a screen of M5 with LWMA 14 on volumes Valter {image}
Very usable... note the volume peaks right before the turns.
Ivo
Trouble lies in what we believe to know for sure that just ain't so.
  • #10
  • Edited 7:24am Mar 5, 2018 5:32am | Edited 7:24am
Holding my longs (for now). And possibly add. Even though I don't know the future.
Can anyone say why?
EURUSD 5min graph.

Ivo
Attached Image
Trouble lies in what we believe to know for sure that just ain't so.
  • #11
  • Edited 9:28am Mar 5, 2018 9:07am | Edited 9:28am
Quoting ivob
Holding my longs (for now). And possibly add. Even though I don't know the future. Can anyone say why? EURUSD 5min graph. Ivo {image}
I'll give the thought process.

1. reason to get in: I expected a point 3 up. (where it says entries) because:
- price went to trendline without pause after which it was above that high volume candle (low in this graph --> thin red line providing support)
- the 1 red bar was at the hourly... that's when games are played often.. Marketmakers keep the price down a little longer because hourly traders come in anyway so they buy from them at good price. This is a trick we often see. If price happens to be at important point at the hourly think about what they could do to f*ck people and use it against them!

It's low volume (smart money/the minority) that moves the market beyond resistance or support after buyers and seller have "eaten" each other.

2. After entry we had breakout (where it says bo in red) of the shallower channel. (4 bars outside). After that we expect another point 3 up, at least an attempt. This happened (price went a lot further later on. So no reason to close positions. Action after Bo is always hold. In case of failed breakout (fbo) it would have been short or reverse when long.

Ivo
Trouble lies in what we believe to know for sure that just ain't so.
  • #12
  • Mar 5, 2018 5:47pm Mar 5, 2018 5:47pm
Quoting ivob
{quote} I'll give the thought process. 1. reason to get in: I expected a point 3 up. (where it says entries) because: - price went to trendline without pause after which it was above that high volume candle (low in this graph --> thin red line providing support) - the 1 red bar was at the hourly... that's when games are played often.. Marketmakers keep the price down a little longer because hourly traders come in anyway so they buy from them at good price. This is a trick we often see. If price happens to be at important point at the hourly think...
Dear Ivo,
Thanks for the explanation teachings. I am going to start paying more attention to hourly bars and see where tricks are played. I find it amazing how even tough I use a different method without volumes, I get the same picture to what price is doing and how I would have managed that same trade. I guess that's why people recommend to find a strategy that works for you
"Work hard, put in the effort, and follow your dreams..." -Me
  • #13
  • Mar 6, 2018 1:23am Mar 6, 2018 1:23am
preflight check

moved only 34 pips so far which makes chances for greater move later on bigger.
Trading around the top of yesterday's range.
Somewhat choppy right now but current mode is short..
Could be a (shallow) downchannel all day long because on the daily we are at resistance and a very good way to make people fall asleep is a shallow channel.. then when it becomes obvious and everyone goes crazy the move is over.

My definition of a trend is very simple... downchannel=downtrend. Upchannel=uptrend.



This graph is 5min EURUSD.
Ivo
Attached Image
Trouble lies in what we believe to know for sure that just ain't so.
  • #14
  • Edited 1:46am Mar 6, 2018 1:35am | Edited 1:46am
Quoting tzamo
{quote} Dear Ivo, Thanks for the explanation teachings. I am going to start paying more attention to hourly bars and see where tricks are played. I find it amazing how even tough I use a different method without volumes, I get the same picture to what price is doing and how I would have managed that same trade. I guess that's why people recommend to find a strategy that works for you
Regarding the tricks I mean watch the 5min bars around the time (5min before - 5 min after) the hourly finishes.

It's very interesting for Marketmakers to play tricks around the hour:
- let the hourly finish a little different thus similating a pattern...
- make people think price went thru resistance/support or stayed inside..etc.
- Keeping price at certain place of move it to get a better price in 10/15 minutes.

As a rule of thumb I ask myself the question: Where is price and would it be interesting to play a trick now? I believe marketmakers and smart money ask themselves the same question.

Regarding volume:
-Yes it's possible without but sometimes I skip trades because of volume issues.

- I calculate projected volume during a bar which makes it possible to know what volume will be like before end of bar. Once I take a trade and it's not confirmed by volume I get out. Certain bars (FTT: failure to traverse), VE (volatility extension), BO, FBO, inside pennants) have certain characteristics. So I am able to detect quickly if something is out of the ordinary.

Trading is about trading our beliefs.. we know what's going on (system 1, our subconscious..everything learned in the past) but then when something out of the ordinary happens our system 2 (attention, thinking, ratio, alertness) becomes active. It's like driving a car without thinking and then we have to pay attention because someone is crossing the street. So "What wasn't that" is very important. In what way does this situation differ from the ordinary? (whereas the beginner looks for confirmation)

Ivo
Trouble lies in what we believe to know for sure that just ain't so.
  • #15
  • Edited 3:03am Mar 6, 2018 2:51am | Edited 3:03am
Free money... for edge traders.

If the projected volume intrabar after a peak is VERY VERY low.... (40% of previous bar) then a trade in opposite direction has very good chances..
This dry-up "edge" usually lasts one minute or less... Take the trade as soon as price moves in opposite direction and volume goes to 50-60%. ( I took it earlier).
Of course the same is true if the volume at close of bar is 40% but this almost never happens... guess why.
In this case I got out at high of bar. My bias is still short.

Ivo
Attached Images
Trouble lies in what we believe to know for sure that just ain't so.
  • #16
  • Mar 6, 2018 6:19am Mar 6, 2018 6:19am
Turned out that the previous image was the start of a major turn...

The trend is up now, I'm probably not the only one who noticed.
It could be bumpy, shaky, choppy but the trend is up.

Example of tricks exactly around the hour intended to shake out longs.
BTW I took a "shallow trendline" trade. Long of course. I like those. They appear every day.
The shallower trendlines appear when the trend is still valid, but the volatility (and volume) went down somewhat.

Let's see what happens as soon as price touched the other trendline..

Ivo
Attached Image
Trouble lies in what we believe to know for sure that just ain't so.
  • #17
  • Edited 11:49pm Mar 6, 2018 11:30pm | Edited 11:49pm
preflight check

Only moved 31 pips so far. Extension is soon expected.
We passed the highs of yesterday and price got rejected there. There is some resistance at current levels (daily).
I took a small short position aiming for low of day.
Currently in a downtrend on the 5min with still a lot of volume coming in, in the next hour.
On the daily there is room until 1.25.... on the downside until 1.23
Regarding possible trend-days tomorrow/Friday are good candidates. As we are mid-range, price is around VWAP and there is not much news I expect some chop.

Ivo
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 79 KB
Attached Image
Trouble lies in what we believe to know for sure that just ain't so.
  • #18
  • Edited 3:18am Mar 7, 2018 2:56am | Edited 3:18am
Key point in the day. Nailed it. Screenshot is exact moment of entry.
Took partial profits.
Volume is not crazy yet... I think the market can generate more. We are moving away from VWAP.
Price grinding up. I like it like this... (no climax yet). Can go 70 pips more.
I could be wrong..but took partial profits. Day is good already.
Holding is basically a gamble...but the gamble is with the money from the casino and this is the trick/key.
A good day can now stay a good day or become a VERY good day. That's a good deal even if it happens 1 out of 5 times.
Another advantage of holding is that I cannot do (other) stupid things.

Graphs below is 5min EURUSD

Ivo
Attached Images
Trouble lies in what we believe to know for sure that just ain't so.
  • #19
  • Mar 7, 2018 3:03pm Mar 7, 2018 3:03pm
ivob, I like your thread so far.

You said price has a move, retracement, and continuation (which may fail). My question is, what do you consider a successful continuation? Does it need to tick above the previous high of the initial move, close above the previous high, or create a measured move based on the initial thrust? Or do you have some other way of defining it?
  • #20
  • Mar 7, 2018 11:58pm Mar 7, 2018 11:58pm
Preflight check

Moved only 21 pips so far. Extension is expected.
Yesterday was a low range day, the lowest in 7 days. I expect a large move the day after so it could come today.

We are inside yesterday's range. Midpoint is 1.24150 which is also the close. There is a lot of volume there. If we go thru I expect to go to yesterday's high.
Yesterday was a high volume day with a neutral bar. I believe we can continue to go higher, it should really not take a lot of effort for price to take out 1.25 again.

Strategy: wait for price to choose direction (point 1), wait for retracement and enter at point3. Not much can be said from current priceaction except that we're in an upchannel on the 5 minute.
Ivo
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot2.png Size: 81 KB
Trouble lies in what we believe to know for sure that just ain't so.
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