The ACD Method
- Thread starter sbrowne126
- Start date
I have been lurking this thread for years without replying. I think more than anything it's the mindset that is valuable. Unlike a lot of guys on here, I never really thought about getting rich from trading, I just thought it would be fun, and I like action. I come from a gambling background, sports and poker, and maybe that gave me the right mindset. I have never thought I could predict the future, and a loss doesn't bother me. I just try to look at what is happening around me and try to put my self in a position to benefit. I remember way back in the beginning Mav saying ACD wasn't a magic bullet, you still needed to know how to trade. That probably bothered a lot of people, but it makes sense. I just see ACD as a road map for a session, be it a year or a day, and go from there. I'll write out a few observations based on my limited experience with the method.
1. Quit obsessing about exact OR times and A levels. Pick something, and be consistent. I like the A to A levels to encompass roughly 50 to 70% of a sessions expected range.
2. If something isn't "happening" at the A's, you aren't doing it right. In my opinion they should stop moves, or at least pause them. It's the action at your A's that give you a chance to find good R/Setups.
3. I like to see price break up or down out of an OR, stop short of an A, attempt to rally back into the OR, fail there, and trade back through the first drive. I have found these to be really good from a R/R perspective. I ALWAYS let the market take me into the position. Maybe I have too much of a "gambler" mindset, but I have found that even when these don't work, I often get an opportunity to move my stop to a point where the loss is zero or negligible very quickly. Being a gambler, I love free shots at 40 tick moves, even if i get stopped out too quickly every once in a while.
4. Fades are also great. I have a few rules for them that I picked up in this thread. First I look for wide opening ranges. Ideally over 25% of an expected range. I have noticed that if price breaks hard from these and trades straight through an A level, a reversal can be a really powerful signal. I have had countless winners risking 10 to 15 ticks that hit and even exceeded the opposite A level, which will usually return 35 to 60 ticks when they work.
Obviously I am very inexperienced at this, which is proven by my really basic little setups. But guess what, I don't lose money, which from what I gather, is kind of rare. The road map of ACD has allowed me to get screen time without doing serious damage to myself. I think it would be really hard to blow out using ACD as long as you aren't an idiot about position sizing. Thanks Mav and everyone else who has made this thread great and helped people to stop flying blind. I really appreciate it.
1. Quit obsessing about exact OR times and A levels. Pick something, and be consistent. I like the A to A levels to encompass roughly 50 to 70% of a sessions expected range.
2. If something isn't "happening" at the A's, you aren't doing it right. In my opinion they should stop moves, or at least pause them. It's the action at your A's that give you a chance to find good R/Setups.
3. I like to see price break up or down out of an OR, stop short of an A, attempt to rally back into the OR, fail there, and trade back through the first drive. I have found these to be really good from a R/R perspective. I ALWAYS let the market take me into the position. Maybe I have too much of a "gambler" mindset, but I have found that even when these don't work, I often get an opportunity to move my stop to a point where the loss is zero or negligible very quickly. Being a gambler, I love free shots at 40 tick moves, even if i get stopped out too quickly every once in a while.
4. Fades are also great. I have a few rules for them that I picked up in this thread. First I look for wide opening ranges. Ideally over 25% of an expected range. I have noticed that if price breaks hard from these and trades straight through an A level, a reversal can be a really powerful signal. I have had countless winners risking 10 to 15 ticks that hit and even exceeded the opposite A level, which will usually return 35 to 60 ticks when they work.
Obviously I am very inexperienced at this, which is proven by my really basic little setups. But guess what, I don't lose money, which from what I gather, is kind of rare. The road map of ACD has allowed me to get screen time without doing serious damage to myself. I think it would be really hard to blow out using ACD as long as you aren't an idiot about position sizing. Thanks Mav and everyone else who has made this thread great and helped people to stop flying blind. I really appreciate it.
good stuff Maverick but I personally would prefer looking more into Price Discovery and Auction Theory. The problem with Keynesian beauty contest and what he thought the "stock market" speculation is that it is not about "valuation". When it comes to trading it is not about being right or wrong, but making more on winners than losers.
I asked specifically about markets being "efficient at what" to make sure we have a common ground or not. Markets are not discounting the future events, they are discounting the future as we think it of it or as the current state of the information allows. That the latter is priced in quickly (much quicker nowadays than in the past) that I agree with. If you want to call it "efficiency" that's fine by me. But does that really deserve the term "efficient" when:
1. we can all have the same information available at the same time, yet each participant is treating the same information differently, depending on expectations etc.
2. the new information is coming out all the time and it is readjusting our expectations about the future, not to mention the fact that it does not happen instantly, there is some gravity to the markets (price discovery)
As a result, some market participants will be trapped on the wrong side of the markets and will have to capitulate. The beauty of the markets is that no matter what the only outcomes are that the next tick can be up or down. As traders we don't need to worry about valuations, being right or wrong, trading all the time or not. We can just pick the spots when the market is trying to price in the new information and/or other players are capitulating (for whatever reason). As some traders say, in markets you are playing your own and other emotions, the rest including the news is irrelevant.
I have no problem if someone wants to call markets random (for whatever reason) because I think its a matter of perspective. But for me human emotions have some common traits and therefore are not random. As such the collection of individual's actions can not be called random either. I think that in a truly random markets trading would be impossible and pointless.
I asked specifically about markets being "efficient at what" to make sure we have a common ground or not. Markets are not discounting the future events, they are discounting the future as we think it of it or as the current state of the information allows. That the latter is priced in quickly (much quicker nowadays than in the past) that I agree with. If you want to call it "efficiency" that's fine by me. But does that really deserve the term "efficient" when:
1. we can all have the same information available at the same time, yet each participant is treating the same information differently, depending on expectations etc.
2. the new information is coming out all the time and it is readjusting our expectations about the future, not to mention the fact that it does not happen instantly, there is some gravity to the markets (price discovery)
As a result, some market participants will be trapped on the wrong side of the markets and will have to capitulate. The beauty of the markets is that no matter what the only outcomes are that the next tick can be up or down. As traders we don't need to worry about valuations, being right or wrong, trading all the time or not. We can just pick the spots when the market is trying to price in the new information and/or other players are capitulating (for whatever reason). As some traders say, in markets you are playing your own and other emotions, the rest including the news is irrelevant.
I have no problem if someone wants to call markets random (for whatever reason) because I think its a matter of perspective. But for me human emotions have some common traits and therefore are not random. As such the collection of individual's actions can not be called random either. I think that in a truly random markets trading would be impossible and pointless.
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1. sounds like you are setting up more for fades.
2. you say that probably because you set up for fades. If you set up for momentum play, price trading straight through A can be a good signal.
3. again, if you're set up for fading then this is normal market behavior. The problem is that you would have to define clearly what needs to happen for you to get in (to make sure it's not just a move taking out stops above recent push). Also, if you were set up for fading to begin with, how much more of a further move you expect?
4. Again, if you're set up for fading that would be correct way to play it. Market tries to explore value in one direction, fails, so it will probably check the other side. But if you are not properly set up for fading then you might be misinterpreting same move as (depending on PA) it could be aggressively looking for value in that direction and you're fading strong market.
Who said ACD is the method that must be incorporated in order to be successful? I'd say you haven't found your own niche then. No reason to give up trading (looking for your own spots) as long you are not bleeding money left and right.
@punisher @Maverick74 or anyone else....
Apologies if this has been discussed. Has anyone used pivot points and the corresponding S1,R1 levels, etc. (from prev day) in place of the OR high and low ? Your A up or downs would then be off those points. Thanks
I'll tell you what koolaid. I think I've told this story many times before, but back in the days when I traded equities for Worldco, I had a mentor. I sat next to him and just watched him trade and just observed what he did and why he did it. Tried to see things from his perspective. Why don't you do this. Pick a market, any market. Just something you are watching. Whatever it is, I probably have the NL on it. I'll give you my perspective for whatever that is worth. I'll walk you through how I would trade it or at least approach that market. Just to give you my perspective. It helped me immensely when I was starting out.
Good stuff and welcome to the board!
Mr Mav. Love that post on markets as a discounting mechanism. How does a bitcoin market fit into rational discounting model? I can grasp what you posted regarding commodities,indicies etc.. to the best of my abilities but when a market goes 'batshit' like bitcoins I just tune it out and dont want to understand and this is probably not wise.
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