Bear roast today.
The ACD Method
- Thread starter sbrowne126
- Start date
Some interesting number line readings 3 days into the new month.
Risk assets are not really adding values to the number line. ES is -1, Copper -2 and CL is 0. Bonds are plus 1 and the dollar index plus 2. Absolutely no tells here.
On the commodity side Sugar is plus 5 yet looking at the chart you would never know it. Coffee is plus 4. Same thing. Live cattle is looking like it's breaking out and we have a plus 4 there to confirm it. Coco is about to break out but only a plus one. Cotton comes in at minus 5. Soybeans is the strongest of the grains at plus 5.
Risk assets are not really adding values to the number line. ES is -1, Copper -2 and CL is 0. Bonds are plus 1 and the dollar index plus 2. Absolutely no tells here.
On the commodity side Sugar is plus 5 yet looking at the chart you would never know it. Coffee is plus 4. Same thing. Live cattle is looking like it's breaking out and we have a plus 4 there to confirm it. Coco is about to break out but only a plus one. Cotton comes in at minus 5. Soybeans is the strongest of the grains at plus 5.
Fwiw I ran some quick tests and found only a .14 correlation between volume and range increase. That wouldn't even be considered a weak correlation. Gonna test more later to see if it increases directional properties at all. I haven'tfound range or pivot contraction to have any predictive value either. Only stat of value I've found so far is when avg noise is a smaller than usual % of range. Basically it seems that trendiness trends and that can help immensely in product selection.
I'm going to have to file volume in that nuance category. If it were so easy to just scan for volume, my mom would be a billionaire. LOL. I still think volume can be good for scans but no, it's not going to be as simple as AAPL is breaking out on heavy volume, load the boat. But we can all dream right?
Absolutely NOTHING going on in FX. Almost every pair I follow is in the middle of it's new monthly range.
One of the strongest things about ACD is it keeps out of the market a lot. The last few weeks have been a great example. Market is volatile and moving a lot but not really going anywhere. The ACD levels have adjusted for the increase in volatility over the last few months. So while a lot of guys on ET are pulling their hair out because they are short risk assets or getting chopped up in the Euro, there really is nothing to do.
I am watching Coco and Live Cattle closely. These two trades have some nice potential.
I am watching Coco and Live Cattle closely. These two trades have some nice potential.
One of the Livermore-isms that really helped me figure out trading was when he said that a trader isn't "working for daily wages" and doesn't need to make money every day, but can (and should) wait for the best opportunities.
Clearly there are some traders who believe the opposite and can make a living that way, but that's not how I want to make my living.
I personally like the circuit breaker aspect as well. Max loss is two capped losses per day. Max gain is unlimited.
Some random stuff I was playing with today.
I've been looking a lot at the average distance traveled away from the open in both directions.
Line 1 is the average of the smaller of the two distances over the last 2000 trading days. Line 2 is the average + 2 standard deviations, meaning that line will contain 95% of all smaller moves over the period tested.
That means that the closer to line 2 price gets, the greater the likelihood that it will be the larger move of the day (above or below the open).
Line 3 is the average of the larger of the two moves of the day. To me it means that if price travels past line 2, line 3 would be a good minimum target. It is worth noting that Line 3 + 2 standard deviations nearly triples the profit target, so really you have a whole range where the max move could fall. I guess that is where trader skill really comes into play.
Once price has travelled down past the range that contains 95% of smaller moves, it is safe to say that will usually be the bigger of the two distances. So if price should reverse back above the open like it did today, chances are that price will be contained within the smaller move range. Line 4 is the range that contains 95% of smaller moves to the upside. You can see todays run up pretty much failed right at that point.
I've been looking a lot at the average distance traveled away from the open in both directions.
Line 1 is the average of the smaller of the two distances over the last 2000 trading days. Line 2 is the average + 2 standard deviations, meaning that line will contain 95% of all smaller moves over the period tested.
That means that the closer to line 2 price gets, the greater the likelihood that it will be the larger move of the day (above or below the open).
Line 3 is the average of the larger of the two moves of the day. To me it means that if price travels past line 2, line 3 would be a good minimum target. It is worth noting that Line 3 + 2 standard deviations nearly triples the profit target, so really you have a whole range where the max move could fall. I guess that is where trader skill really comes into play.
Once price has travelled down past the range that contains 95% of smaller moves, it is safe to say that will usually be the bigger of the two distances. So if price should reverse back above the open like it did today, chances are that price will be contained within the smaller move range. Line 4 is the range that contains 95% of smaller moves to the upside. You can see todays run up pretty much failed right at that point.