The ACD Method

Shanb · Dec 23, 2011

Quote from Maverick74:

OK, I'm playing around with the chart a little, hopefully this will help. I'm attaching a comparison chart of the DIA/FCX spread and comparing it to just being long SPY. You will see that SPY is up .30% today and this spread is up over 1.60% or 5 times as much and it's market neutral.

Nice chart!

Do you ever stop working John? Lol c'mon take a break you deserve it!

Maverick74 · Dec 23, 2011

Quote from Shanb:

Nice chart!

Do you ever stop working John? Lol c'mon take a break you deserve it!

I think I might need a 12 step program.

Or maybe a Bright boot camp. That might completely turn me off from trading.

mfbreakout · Dec 23, 2011

Hi Maverick74,

Thanks for pointing out following. Your posts were giving the impression as spread trading is what newbie traders should focus on or even experienced traders will find easier to execute vs other forms of trading.

"To be honest, this is a more advanced way of trading. So if you are not profitable now in what you are doing, spread trading is not going to make you profitable. Just as in trading options, you are adding layers of complexity. "

Also, from your earlier post, What if the market is weak, What if the market is choppy, What if the market is sideways VS if market is trending etc.. gives a hint towards one need to do a whole a lot of homework, should i say 5,000 hours to get going ( i just halved the 10,000 hours needed to be an expert in any endeavor per most experts).

I can see this being a case where an expert broker can be lot of help to traders new to spread trading. If you know of any good spread trading broker, let me know.

Maverick74 · Dec 23, 2011

Quote from mfbreakout:

Hi Maverick74,

Thanks for pointing out following. Your posts were giving the impression as spread trading is what newbie traders should focus on or even experienced traders will find easier to execute vs other forms of trading.

"To be honest, this is a more advanced way of trading. So if you are not profitable now in what you are doing, spread trading is not going to make you profitable. Just as in trading options, you are adding layers of complexity. "

Also, from your earlier post, What if the market is weak, What if the market is choppy, What if the market is sideways VS if market is trending etc.. gives a hint towards one need to do a whole a lot of homework, should i say 5,000 hours to get going ( i just halved the 10,000 hours needed to be an expert in any endeavor per most experts).

I can see this being a case where an expert broker can be lot of help to traders new to spread trading.

That goes without saying (I hope). Trading is very difficult no matter what your style is and yes, it's going to take thousands of hours of hard work to master whatever style you are using. Although I do disagree that just because you spent 4k hours doing one thing, does not mean it will take 4k hours to learn another style.

Once you learn how to trade, you know to trade. Everything after that is tweaking and trial and error. There are no short cuts.

Spread trading in my opinion maximizes all the advantages that ACD provides. That doesn't mean learning it will be easy. It just means it will be worth it.

If one has any ambition of ever managing money one day, learning market neutral strategies is very important. If one has any desire to trade prop one day, market neutral strategies will be essential. If one simply wants to trade their own account while working a day job, I think ACD will give one a great framework to make solid directional macro calls.

Shazbatz30 · Dec 23, 2011

Quote from Maverick74:

If one simply wants to trade their own account while working a day job, I think ACD will give one a great framework to make solid directional macro calls.

That would be me. Sleep on the job during the graveyard shift, and trade during the day. Works out pretty good.

Maverick74 · Dec 23, 2011

Quote from Shazbatz30:

That would be me. Sleep on the job during the graveyard shift, and trade during the day. Works out pretty good.

What do you do for a night job?

medicsix · Dec 24, 2011

First time is several years I'm not working Christmas so I made myself a present - intraday, daily, weekly, monthly charts set up with all the ACD data I want to look at.

Took more than a few hours.

Time for a cup of "hot chocolate" in front of the tree (milk, Bailey's, Kahlua)

Happy Holidays...

Shazbatz30 · Dec 24, 2011

Quote from Maverick74:

What do you do for a night job?

I'm an Electronics Technician for the US Postal Service. I basically just wait around for the mail processing equipment to breakdown. Usually just little BS stuff like mail jams and faults.

gptrader · Dec 24, 2011

Quote from Maverick74:

That goes without saying (I hope). Trading is very difficult no matter what your style is and yes, it's going to take thousands of hours of hard work to master whatever style you are using. Although I do disagree that just because you spent 4k hours doing one thing, does not mean it will take 4k hours to learn another style.

Once you learn how to trade, you know to trade. Everything after that is tweaking and trial and error. There are no short cuts.

Spread trading in my opinion maximizes all the advantages that ACD provides. That doesn't mean learning it will be easy. It just means it will be worth it.

If one has any ambition of ever managing money one day, learning market neutral strategies is very important. If one has any desire to trade prop one day, market neutral strategies will be essential. If one simply wants to trade their own account while working a day job, I think ACD will give one a great framework to make solid directional macro calls.

I have thousands of hours of trading, and do make money. I also work full time, spread trading has an intriguing aspect I haven't tried before. Any reccomendations for training or books. There is a lot on the web, but hope I can narrow that down if someone in this thread has ideas. I do use ACD and have this programmed in my esignal charts for a few years now.

gmst · Dec 24, 2011

Quote from Maverick74:

No, I don't think I explained this well enough. When I use to trade stocks. I traded big moves. But not big stocks. In other words, take a stock that has an avg ATR of 1 pt a day like TIF. I would trade the stock when it moved 5 pts.

You just want to avoid the noise. Trading everything every one else is trading is going to frustrate you. Perfect example in fact was the Euro. The whole world has been short that pair. And during the Euro debt crisis it rallied! It refused to go down because everyone and their brother was short.

I have spent a lot of time discussing this on this thread further back. If everyone is trading the same product, the moves are not very clean. They are messy if only for the fact that there are stops everywhere at every tick. I'm not saying to trade things that don't move. I'm saying trade things that are moving that don't usually move much! I hope this helps.

Thanks, it was very clear explanation. Got it. The way to do would be News/Market scans to figure out what is moving today at high volume, trying to find sustained moves. And I am adding in here the approach your trader friend took - about not the stocks that moved today, but the stocks he expect to move tomorrow - Really good thinking!

Btw, your example of Euro is perfect. Trading Euro on multi-day/week/month perspective last year Q4 was damn hard. I had some negative delta option trades on, and constantly hedging/de-hedging when Euro moved from 1.3 to 1.4 in 15 days was extremely hard. Saved a lot of money by my intelligent hedging, but still managed to lose a lot on the option position. It was hard - won't forget that experience for a long time.

Merry Xmas Everyone!