The ACD Method
- Thread starter sbrowne126
- Start date
The two are one and the same. Directional traders are de facto long vol traders as a lack of vol will chop up a directional trader. A short vol trader is essentially a mean reversion trader as they prefer choppy conditions.
Spread trades are not long vol, they are exploiting a relationship between two products. Spread trades can be long vol or short vol in nature. Mean reversion traders have a payoff structure that resembles a short vol trader. Mean diversion traders have a payoff structure that resembles a long vol trader. Spreading Coke and Pepsi is a mean reversion trade.
There is no "outside the box" pair. You are either betting on convergence or divergence.
Sorry I was away today traveling. In case anyone was wondering why there was no play by play every 5 minutes of the day. 
Regarding spreads, as I've said before, there is no right or wrong or best way to use ACD. I try to present different ideas and ways people can use ACD to make this thread more all inclusive. Each trader has to find their own comfort zone. Some like day trading, others swing trading. Some options, some futures. Spread trading is just another way to use ACD. Nothing is better or worse, just different.
Regarding spreads, as I've said before, there is no right or wrong or best way to use ACD. I try to present different ideas and ways people can use ACD to make this thread more all inclusive. Each trader has to find their own comfort zone. Some like day trading, others swing trading. Some options, some futures. Spread trading is just another way to use ACD. Nothing is better or worse, just different.
You couldn't give me King's money to buy Gold right now.
I think I told this story before on this thread. Back in the day when I was an active equity daytrader, I was at this firm in NY and I was talking to another trader. We would share notes and ideas everyday on what to watch and so on. I would always pull up these stocks that had big moves the previous day and would say, I'm going to watch this today. And this guy would say why, the move already happened, it's over.
Then he would show me the stuff he was going to watch and I would say, why are you watching that, that thing doesn't move? And he would say, that's the point, it hasn't moved yet, I'm anticipating it moving today. And I would look at the chart and ask him how the hell did does he know that. And he said, I don't, you just have to put the pieces together.
I really think this is what 95% of the guys on here don't get. You can't trade the obvious. You can't trade yesterday's move, today. At some point, you are going to have to get in first or early and anticipate something happening. And that takes a lot of work. No shortcuts.
Or.....you can specialize in one entity that has good volatility or good cycling over the last say, 5 years.
Every instrument is the same in so much as volatility cycles are concerned.
Pick a target, learn it's habitat, and wait for the correct moments to strike.
I had BAD trading day on Friday. All due to my desire to trade with size. I try to trade with size couple of times a month and mostly get SLAPPED. My system gets re balanced and i go back to more manageable position size.
Sooner or later , I will learn how to trade with big position.
Sooner or later , I will learn how to trade with big position.