Quote from Maverick74:
OK, so a good old friend of mine from the P&R forums decided to come up here and give me some criticism of my method or perhaps my application of this method. He sent this to me over PM. I won't name the poster as it's irrelevant. However, I do wish to post his comment and address on here as there has been very little commotion on this thread (which has been good). For the record, I love criticism and actually don't mind people posting some on this forum. I'm not sure how sincere this poster really was, but I'll address it none the less.
His comments:
"Bottom line: You either follow a method or you don't. You either take a confirmed signal or you don't. If you trade the ACD method, or any other for that matter, then you take its confirmed setups. Period. Everything else is only so much fluff & fold, including what your CTA friend does. If you hold this ACD method in such high regard, would you not have taken a confirmed setup irrespective of sentiment et al?
May I recommend Occam's Barber Shop for a really close shave?"
OK, so let's get right to it. I know the phrase price action can be very ambiguous to many on here. So let me try to define what I mean by the word price action and point out that the ACD methodology IS a price action based system. It is NOT a rules based system. A rules based system usually follows a logic of "if/then instructions. If this happens, then do that. It's very static and rigid and quite frankly, rules based systems work much better in predictable environments, certainly not the financial markets.
Price action is about making decisions based on the interpretation of several variables. It usually leans on the trader's past history, experience, knowledge and ability to recognize nuance and subtlety. The purpose of using price action over a rules based system is to spot and locate opportunities in the market that are NOT obvious to everyone else. Static systems are the opposite. Because static systems regurgitate the same variables over and over again in the same rigid manner, they can easily be spotted and acted upon by anyone that pays attention to it. And believe me they will if those static patterns happen to be working.
The reason why ACD cannot be a rigid rules based system is because there would have to be an assumption that the input variables are absolutely correct, which we have no idea that they are. Those input variables are the ATR length, the width of the opening range and the A variable. Since these are just "approximations" we cannot take them as absolutes.
So since we know there is some wiggle room in these input variables, we have to accept the fact that they are not always going to be precise and we must use them in a way that gives us some allowance for deviations. By utilizing a price action approach where we are watching several markets and using all the data available to us, we can actually get a much clearer picture of what is happening.
I have often described ACD as lens in which we view the market. We still have to trade and make decisions, but ACD makes those decisions more clear and precise.
His comment about confirmed set ups. There are NO confirmed setups in ACD. Again, the whole word confirmed brings us back to the rigid world of rules based trading. That simply does not work for me. When I use the word confirmation as it pertains to an A level, that simply means it has confirmed in "time". It does not mean close your eyes and take the trade. There are many reasons why I would NOT trade a confirmation on any time frame and I've gone over that in detail and have given specific examples.
Let me say this again, the best trades one finds in the market are usually the ones nobody else sees. ACD gives you the lens to find those trades. The whole world can identify a trend. The whole world can spot new highs and new lows and which products are breaking XYZ moving avg or taking out some critical support or resistance levels. I don't take trades that the whole world is running into. Not because they are not going to work, often times they do. But they will be messy. Stops going off all over the place. I prefer the trades no one is watching or levels that no one is paying attention to. Even better if most people are on the other side of the trade.
To sum up, trading is not easy. Very few people will ever succeed at this. ACD will not make a bad trader into a good one. It will only make a good trader better. There are no magic levels. There are no magical setups. Trading is going to require you to go against the best people in the world and beat them day in and day out every single day. It's going to require more then rules to succeed. It's going to require more then just a "system". I also want to point out there are a millions ways to use ACD and the way I use it is not the "right" way. It's simply MY way.
Hopefully I have addressed this PM in full. I always welcome comments and feedback. Both good and bad. It's possible the other poster simply doesn't like me and wanted to mouth off. Fair enough. But in case his comments were sincere, my above post should be an adequate response.
