The ACD Method

Maverick,

As always thank you! I think I need to re-evaluate my OR for the monthly level, or take a look at my entry method/timing. I think I'm jumping the gun on some of my trades, (especially when I'm leaning against the monthly level).

Again, thanks for your insight, much appreciated.
 
Quote from Quon:

Maverick,

As always thank you! I think I need to re-evaluate my OR for the monthly level, or take a look at my entry method/timing. I think I'm jumping the gun on some of my trades, (especially when I'm leaning against the monthly level).

Again, thanks for your insight, much appreciated.
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Don't get caught up in precise levels. It's much much much more important that you understand "your" levels and why you chose them. My levels are not better then yours. But I understand my levels forward and backwards seven days a week and twice on Sundays. Remember, ACD is simply a lens in which to understand price action. You and I might wear different shades of sunglasses but if we walk outside and it's raining, we should both agree no?

Too many traders focus on minute details and fail to see the forest through the trees. Just try to focus on price. Think about what is actually happening in the market with regards to price. Leave your personal opinions out of it. I always tell traders, markets are not that complicated they can only go up or down. You have two choices. Most important decisions in life have far more then two choices to make. Remember, trading is easy, very easy, when compared to real decisions you make every day that affect your family, your health or people around you.
 
Quote from Maverick74:

Also, we are now back above the monthly A down in the ES. This is one of my favorite trades when the weekly A up is right above the monthly A down and we cross back above the monthly A down to confirm the weekly A up. Solid setup for a low risk trade.
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Very good thread and thanks for the relevant information provided.

Just a quick question, sorry if this has already been answered.

What is the time basis for weekly and monthly opening ranges ? 1st day of the week , of the month ? I think I saw 1st Friday somewhere in the thread ?

I don't remember that Mark Fisher talked about higher timeframes in his book and I find this idea very interesting.
 
Quote from Joman:

Very good thread and thanks for the relevant information provided.

Just a quick question, sorry if this has already been answered.

What is the time basis for weekly and monthly opening ranges ? 1st day of the week , of the month ? I think I saw 1st Friday somewhere in the thread ?

I don't remember that Mark Fisher talked about higher timeframes in his book and I find this idea very interesting.
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There is no "standard" time basis. Again, I really want to emphasize something. Whenever I Google ACD to see what others are saying about it, all I get our topics where people are asking what the magic A levels are or what are the "right" opening range times. There are no NO secret A levels and there are NO right opening range times. You need to pick times and levels that make sense to YOU. Not me or anyone else. At the end of the day, you are the one that has to pull the trigger.

I hate to disappoint everyone, but I am not an oracle. I have no secret levels or magic time frames. But I understand the logic of the numbers I use and therefore it makes sense to me and it allows me to pull the trigger.

I wish trading were that easy. Think about it, if there were a correct level to use, one could easily back test looking for those levels and would find them relatively quickly. You can curve fit anything. Again, this is where traders get lost in the details when they should be keeping their eye on the big picture.
 
I appreciate the fairness of your answer :)

You're right, this method is flexible enough to make it your own.

Keep up the good work.
 
Quote from Maverick74:

There is no "standard" time basis. Again, I really want to emphasize something. Whenever I Google ACD to see what others are saying about it, all I get our topics where people are asking what the magic A levels are or what are the "right" opening range times. There are no NO secret A levels and there are NO right opening range times. You need to pick times and levels that make sense to YOU. Not me or anyone else. At the end of the day, you are the one that has to pull the trigger.
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I get what you're saying and why you're saying it, but I think there's a bit of nuance in the idea that there are no right levels. Certainly there's a right and wrong way to approach his method.

Fisher's trading began from the premise that the intraday opening high-low of an instrument determines its close at a statistically significant level of confidence. Care must be put into choosing the right "domicile market".

The theory implies that you're casting a relevant net on the behavior of those traders who move the instrument, and that the net should land around when big players take their positions (relevant to your preferred holding period). You mentioned gaps and above-average volume as possible boundaries. To me, for the indices, I'm using the time between two big cyclical reports. But I'm mostly using it to support my other method, by providing a lens to intraday behavior so I can fine tune when I jump in.

The levels can vary, and they're not "objective" in the sense that they always work for all people at all times. But it also doesn't mean that the method is completely relativistic.

It wouldn't make sense to choose the last 47 minutes of the day as an OR in determining what the next morning's open, for example. For other commodities it makes no sense to me to arbitrarily choose, say, the first five days of every month. Why would it? Do funds or big traders change their models like clockwork based on day 1 of every month? Intraday (to me) seems to accommodate more flexible ORs; longer term seems like it requires some data analysis.

That's why I think it's fair for people to wonder what the right levels are. "Right" implying logical -- consistent with the theory and not chosen out of a hat, while still accommodating the right volatility and holding period for the individual trader.
 
Quote from Samsara:

I get what you're saying and why you're saying it, but I think there's a bit of nuance in the idea that there are no right levels. Certainly there's a right and wrong way to approach his method.

Fisher's trading began from the premise that the intraday opening high-low of an instrument determines its close at a statistically significant level of confidence. Care must be put into choosing the right "domicile market".

The theory implies that you're casting a relevant net on the behavior of those traders who move the instrument, and that the net should land around when big players take their positions (relevant to your preferred holding period). You mentioned gaps and above-average volume as possible boundaries. To me, for the indices, I'm using the time between two big cyclical reports. But I'm mostly using it to support my other method, by providing a lens to intraday behavior so I can fine tune when I jump in.

The levels can vary, and they're not "objective" in the sense that they always work for all people at all times. But it also doesn't mean that the method is completely relativistic.

It wouldn't make sense to choose the last 47 minutes of the day as an OR in determining what the next morning's open, for example. For other commodities it makes no sense to me to arbitrarily choose, say, the first five days of every month. Why would it? Do funds or big traders change their models like clockwork based on day 1 of every month? Intraday (to me) seems to accommodate more flexible ORs; longer term seems like it requires some data analysis.

That's why I think it's fair for people to wonder what the right levels are. "Right" implying logical -- consistent with the theory and not chosen out of a hat, while still accommodating the right volatility and holding period for the individual trader.
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Yes, of course the opening range should make sense. I'm simply referring to the difference of say using 5 minutes vs 10 minutes. I thought that was assumed. And yes, choosing the domicile market is important and that is explained thoroughly in the book.

Please understand, I'm responding to many of these posts assuming the reader has read the book. It would be far too cumbersome if I had to actually write out all the material from the book when I'm assuming anyone who is reading this thread and would actually apply this method to their own trading would make the small investment required to purchase the book.

All the basic ideas are discussed thoroughly in the book.
 
Quote from Maverick74:

Yes, of course the opening range should make sense. I'm simply referring to the difference of say using 5 minutes vs 10 minutes. I thought that was assumed. And yes, choosing the domicile market is important and that is explained thoroughly in the book.

Please understand, I'm responding to many of these posts assuming the reader has read the book. It would be far too cumbersome if I had to actually write out all the material from the book when I'm assuming anyone who is reading this thread and would actually apply this method to their own trading would make the small investment required to purchase the book.

All the basic ideas are discussed thoroughly in the book.
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Right on -- like I said, I know where you're coming from. This isn't about drawing H&S necklines that are visible on every chart. The book's not as precise on the long term stuff though. That's why I threw out my own thinking on Friday-Tuesday every month, hopefully just to get ideas flowing.

I'm just thinking that for each commodity it could be fruitful for people speculate on what they think are relevant ORs, at least for longer term trading. ACD intraday seems straightforward and flexible. But I'm not about to dive into the softs or cotton without a good idea why ACD works for it -- why I'm casting my net a certain way. Just my opinion, take it with a grain of salt; I don't have the track record with this method to speak from experience.
 
Quote from Samsara:

But I'm not about to dive into the softs or cotton without a good idea why ACD works for it -- why I'm casting my net a certain way. Just my opinion, take it with a grain of salt; I don't have the track record with this method to speak from experience.
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This is exactly why "you" need to construct the levels so you know why it should work or not. You shouldn't trust me. ACD is a canvas. You need to supply the paint and brush to create your own art. My art will look like shit to you.

Look, I read the book just like everyone else. I didn't have a direct line to Fisher. I spent 5 years working on this stuff. Yeah, it's a lot of work and I continue to work on it day in and day out. Everyone is going to have to go through the same process. I simply took what I knew about trading and did a lot of trial and error and tried to apply whatever logic I could to put together a complete and robust methodology. There were no shortcuts. I had no reference material to read or websites to go over. In fact, most of you guys reading this thread are getting a 3 year head start on where I had to begin.
 
Quote from Maverick74:

This is exactly why "you" need to construct the levels so you know why it should work or not. You shouldn't trust me. ACD is a canvas. You need to supply the paint and brush to create your own art. My art will look like shit to you.

Look, I read the book just like everyone else. I didn't have a direct line to Fisher. I spent 5 years working on this stuff. Yeah, it's a lot of work and I continue to work on it day in and day out. Everyone is going to have to go through the same process. I simply took what I knew about trading and did a lot of trial and error and tried to apply whatever logic I could to put together a complete and robust methodology. There were no shortcuts. I had no reference material to read or websites to go over. In fact, most of you guys reading this thread are getting a 3 year head start on where I had to begin.
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Agreed: and right on. For those of us who've been at this for a while, I think what you've demonstrated and talked about with ACD really hits it home. Not like anything else I've seen on ET. I'm personally incredibly grateful people like you and Fisher are willing to provide a view into this.

Trading is like that anyway: you have to make any method your own. I've never seen anyone successfully translate their own successful skill to others. You only stand behind the risk of your positions if you fully get what goes into them.

I'm all for talking about the process I'm going through building out my own "lens" here -- that's all I'm saying. In other words, it's not a bad thing that people are trying to figure out what aspects of the method are logical for their own strategies. Some may be looking for magical levels, but I think many are just trying to understand how and when the theory has utility.
 
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