The ACD Method

Quote from Maverick74:

Sure. The levels I use in particular will work very well when volatility is pretty constant as it's a volatility based system. But they don't have to be to the tick. There are many unique factors that distinguish ACD from standard TA. The opening range cycles are "significant" and can be quantified. The system adjusts to current volatility. The time confirmation confirms volatility and price. And the volatility allows one to have price targets. At the end of the day, it either helps you read price action or it doesn't. Like I said, the levels are not magic. I taught the system to many guys in my office and the levels didn't do shit for them.

Because of the simplicity of the system it's very easy to compare different products against each other. That's very hard to do with standard TA. So AAPL has a cup and handle but GOOG doesn't. So what do you do? NFLX broke it's 50 day moving average but so have 50 other stocks. So now what?

As an option trader, I see the market through the lens of volatility. That is probably why ACD is so intuitive to me. If one is enamored with fundamentals or oscillators, this will be hard to pick up.
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Thanks, this explanation is helpful. To narrow it down, if I understand you right, you're saying the ranges can be measured mechanically, but the real value comes from using both volatility and time as the main variables by which you evaluate price action. Classic TA is mostly just concerned with price history.

I don't yet have a sense of how ACD can be used to compare different instruments, but seeing what you guys are talking about here helps a little. My past attempts at cross-market comparisons have created way too much complexity.

The reason that ACD appears to clarify what I'm looking at with my own system, so far, is that it helps <i>visualize</i> volatility. An expansion of volatility is a secondary effect of the setups I take, but it's not something I've tried to deliberately measure and trade off of. Gives me food for thought for testing certain ACD hypotheses.

Thanks again for your insights.
 
Quote from drm7:

I'm only a rank beginner in ACD (and its close cousin, Tony Crabel's opening range breakout), but I'll take a swing at this: The entire foundation of any opening range breakout strategy is a mathematical analysis - there are an unnaturally high number of days where the open is either the high or low of the day. The entire ACD strategy is built around exploiting that anomaly.

The follow-on observation is that, if price moves "enough" from the open, the probability of the open being the high or low of the day goes up even more. The "A" levels are rough approximations of "moving enough."

"Day" could also mean "week" or "month." Supposedly this aberration holds true for most timeframes.

Mr. Fisher also adds a bunch of other techniques on top of that (I haven't even scratched the surface there), but this simple statistical anomaly gets you 80% of the way there.
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What you wrote is an excellent explanation for those looking into this. It doesn't exactly get at what I was asking (i.e., how is this not a flavor of TA which is susceptible to being diluted with more people using it), but I think Maverick provided some ideas along those lines that makes a bit of sense to me. Many thanks.
 
Quote from kinggyppo:

MMFI closed 3.76 today. Lowest print was 2.11 Oct. 2008.
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Market is certainly over sold. But this is where ACD keeps your discipline in check and keeps you from trying to bottom pick the market early. Was not expecting to see the VIX at 50. These selloffs in August can be brutal as there is no liquidity and no one wants to make large capital commitments in August.
 
Maverick, today's fed statement explains
what you saw with ACD on August 2 in bonds,
which at the time seemed weird.
Who knows these things before they are announced?
 
I'm not sure what the difference is. I think it's the same. sometimes we simplify things and it comes across as something new. All these chart patterns and stuff all come from a deep analyses.

What i see is this being a possible difference:
TA would not memorize a pattern but will recognize it when he does his magic.

While others will have taken the TA's ideas, simplified it and made some memorable patterns that one can easily spot.

So one uses the others ideas simplifies it and focuses on memory. while the other develops and does studies to identify patterns.

Even a moving average in the end is TA. Its manipulating data to find a trend.

Just my thought i dont even know what acd is but sounds like it may have some thing to do with my style



Quote from Samsara:

What you wrote is an excellent explanation for those looking into this. It doesn't exactly get at what I was asking (i.e., how is this not a flavor of TA which is susceptible to being diluted with more people using it), but I think Maverick provided some ideas along those lines that makes a bit of sense to me. Many thanks.
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