I gotcha. Just as there is no wrong way to eat a Reese's peanut butter cup, there is no wrong way to use ACD. The number line hinges on the importance of recording significant price action in the market through the A levels. So any significant time frame that generates important A levels I think would be valid. So if you are talking about hour fractals, the problem I see is do you really believe the opening range at the beginning of an hour is statistically significant? If you do, then go right ahead. Remember, the number line is simply a recording device for ACD levels.
The ACD Method
- Thread starter sbrowne126
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I gotcha. Just as there is no wrong way to eat a Reese's peanut butter cup, there is no wrong way to use ACD. The number line hinges on the importance of recording significant price action in the market through the A levels. So any significant time frame that generates important A levels I think would be valid. So if you are talking about hour fractals, the problem I see is do you really believe the opening range at the beginning of an hour is statistically significant? If you do, then go right ahead. Remember, the number line is simply a recording device for ACD levels.
Thanks. From your response I see that the numberline is probably not going to work intraday because I don't think there is anything consistently important about the beginning of an hour, although it is true that the larger fluctuations tend to happen in the time just after the turn of the hour, at least in the ES.
Let me add a few ideas here for you. You can slap an OR on any time period that brings volatility and volume into the market. Examples would be 9:00 central time economic reports, 1:15 pm central time fed meetings and I've found that the European close at 10:30 am central time has been useful for OR. Also noon treasury auctions. So it is possible to have multiple opening ranges during the day, just not at the beginning of an hour.
Thanks. I've got a method for dealing with the fluctuations in volatility throughout the day, so that I'm always comparing apples to apples when it comes to price action. The specific problem I'm trying to solve is the one of "false positive" trade triggers in the context of a change in the hourly trend, either from uptrend to downtrend/downtrend to uptrend or from range to trend in either direction.
Of course, I need a way to distinguish them from the "true positive" triggers that is objective and thought that the numberline concept might be helpful, if it could be applied at a lower timeframe than daily. I think I've come up with something that will work, though, and still be objective, so it's not just me saying "I think I'm going to skip this trade. Doesn't feel right".
One of the key things about ACD is that it keeps you from over trading. It's actually a very passive approach to markets. I'm not sure it's all that effective is one is trying to be very active in the markets. When you talk about trend changes on such small time frames, it kind of goes against what ACD is built for. ACD is about a general bias. And the idea is the bias should NOT change throughout the day. So Fisher created these A levels as a high hurdle for the market to overcome to reveal the bias.
I think most daytraders get chopped up trying to catch every slight move and trend change. Many days ACD tells you not to even bother trading. This is why Fisher recommends following many markets and not just one. If all you follow is the spoos, you will find all sorts of patterns and reasons to jump into trades when crude oil or gold might be offering you a perfect layup.
I'm not saying it can't be done, I've just never seen ACD work well in a high frequency fashion. In fact, as a guy who has been around 1000's of traders over the last 10 years, I think there is a correlation to frequency of trading and failure. Especially in futures. We know that 90% of futures action is noise so we are really trying to capture that 10%. The more you try to catch every turn and every dip and every breakout and every big move, I think you are just sinking in quicksand.
BTW, I know hourly bars don't fall under the category of active trading, just trying to point out that less is more with ACD.
Conceptually, I don't think any market action is "noise" since it all gets put into consideration in my setups, but 90% of it is not "actionable" at the level I want to take action. My average winning trade is about 7 ES points and I enter only after a move has started and never try to pick the top or bottom tick to exit, so I don't grab every tick of a move in my direction, although I will sometimes re-enter if a move demonstrates sufficient power after I've exited. So, to grab those 7 points, the overall movement in the ES needs to be about 15 points. My preference is to make 1 or 2 trades in a day and the most I've had to make in a day is 4.
One of the things that has fascinated me about this entire thread is that so many of the things you have said about the ACD method could also be said about my own. Now, don't get me wrong, I'm not claiming to be someone of importance in the trading world like Mark Fisher, but I also hate overtrading (I'm always looking for a subset of my trades that has negative expectancy, so I can stop taking trades with those characteristics), I also use time, price and volatility as the foundation of my strategy, I also let the market "set the bar" for entering a trade, although I don't use the opening range as my benchmark. Sometimes I will wait for an ES move of more than 10 points before entering. It's all in what the market is doing at that moment and how that movement relates to the movement nearby. You'll recognize this approach from "Reminiscences", where Livermore talks about determining "the line of least resistance" and he talks about how he was at a dinner talking to someone who wanted to go long wheat and he told the guy to wait until it passed a certain price and when the guy asked why not just buy it now, at the lower price, Livermore replied that once it passed the higher price, the probability of it going even higher increased. That's my method in a nutshell.
From reading the thread, I think the one major difference (other than the obvious one I mentioned about me being unimportant) is that I use time as a confirmation of a price move so that I enter at exactly the point price and time jointly confirm a set-up, whereas Fisher seems to wait for some time to elapse after price has confirmed. While I can see the benefits of this (again, getting rid of "false positives"), I have also seen instances where price will keep on moving to the extent that once sufficient time elapses to confirm, a good portion of the trades profit potential is gone.
This thread has kinda died the past month....hows everyone been doing with ACD? does anyone motify their ACD levels now that its the start of Q3 - instead of using Jan levels, using some July levels on a macro basis (start of Q3).
Interesting action in the energy markets since the release from the SPR...Fisher was right on point when he noted some support at 9025 and some of the calendar spreads I think his son was talking about....we are getting some nice levels to play RBOB at the 3.08 breakout level, and the Crack now trading back up to 34. Their might be some opportunity in a Silver/Gold spread right now too...? Interest rate wise, the 2/10 spread has been pretty volitile...if we can firm up on these dips, around 250bp's, financials might be back in play to start buying again...?
Interesting action in the energy markets since the release from the SPR...Fisher was right on point when he noted some support at 9025 and some of the calendar spreads I think his son was talking about....we are getting some nice levels to play RBOB at the 3.08 breakout level, and the Crack now trading back up to 34. Their might be some opportunity in a Silver/Gold spread right now too...? Interest rate wise, the 2/10 spread has been pretty volitile...if we can firm up on these dips, around 250bp's, financials might be back in play to start buying again...?
I'm still here. My macro ACD levels have been spot on all year. There have been some great swing trades. I don't use Fisher's 2 weeks pivot moving average for the start of July, although I believe it's probably valid.
Let me know when you make it down to Chicago jsmooth. Ceres is lovely this time of year.
Hi All,
I'm relatively new to the thread, but have been using ACD for some time now. JSmooth had asked about whether or not anyone re-set after the start of Q3. I'd say less than a "re-set" I kind of layer a new set of data on top of the old. So while I might have macro stuff for the year, the half-year and new quarter presents new opportunities to add another data "blanket" if you will.
I tend to think of ACD as a pile of blankets that I add and remove to find just the right temperature to sleep through the night, (if that makes any sense).
Anywho, this week has stunk for my levels and stocks, (the ones I use for ACD) and after getting a little chopped, (my own stupidity) on Tuesday I'm watching more than trading right now. Last week however was epic! Wondering if anyone else was having a similar experience as of late, (though I'm fully aware we all use different vehicles to make it work).
I'm relatively new to the thread, but have been using ACD for some time now. JSmooth had asked about whether or not anyone re-set after the start of Q3. I'd say less than a "re-set" I kind of layer a new set of data on top of the old. So while I might have macro stuff for the year, the half-year and new quarter presents new opportunities to add another data "blanket" if you will.
I tend to think of ACD as a pile of blankets that I add and remove to find just the right temperature to sleep through the night, (if that makes any sense).
Anywho, this week has stunk for my levels and stocks, (the ones I use for ACD) and after getting a little chopped, (my own stupidity) on Tuesday I'm watching more than trading right now. Last week however was epic! Wondering if anyone else was having a similar experience as of late, (though I'm fully aware we all use different vehicles to make it work).
Welcome to the board. Everyone is going to have different levels but we all should be agreeing on price action. I have a level on the upside of the spoos that should hold at 1354. Crude oil is catching a bid above it's monthly. Nat gas failed at the monthly as well as the weekly. Bonds are sitting right now on the weekly at 125'04. Should hold here. Copper failed at the monthly.
So regardless of what levels we are using we should all be in agreement that the Euro and indices are being bid well. Nat gas is rolling over. Crude is catching a solid bid. Gold obviously broke out and actually just bounced off my weekly at 1584 for the second time this week.