The ACD Method

Quote from Maverick74:

ES yet another failed A down to the tick at 1343 this morning.
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Guys, can you clarify for me the following. Apparently, the ACD method works the best with the most liquid and volatile instruments. Obviously, a consistently profitable ACD trader will scale up beyond any reasonable limits and will become the richest living person on Earth. Somehow, nobody knows such prosperous traders.

On the other hand, trading in illiquid stocks puts a natural cap on position size and consequently limits scalability. So there is no contradiction if someone is a profitable illiquid instrument trader making nice, but capped profits.

Where is the catch? Thanks.
 
Quote from boba15:

Guys, can you clarify for me the following. Apparently, the ACD method works the best with the most liquid and volatile instruments. Obviously, a consistently profitable ACD trader will scale up beyond any reasonable limits and will become the richest living person on Earth. Somehow, nobody knows such prosperous traders.

On the other hand, trading in illiquid stocks puts a natural cap on position size and consequently limits scalability. So there is no contradiction if someone is a profitable illiquid instrument trader making nice, but capped profits.

Where is the catch? Thanks.
More...

most trading approaches work best in liquid and volatile instruments..ask yourself why successful traders using other approaches haven't become the "richest" people on earth?
 
Quote from boba15:

Guys, can you clarify for me the following. Apparently, the ACD method works the best with the most liquid and volatile instruments. Obviously, a consistently profitable ACD trader will scale up beyond any reasonable limits and will become the richest living person on Earth. Somehow, nobody knows such prosperous traders.

On the other hand, trading in illiquid stocks puts a natural cap on position size and consequently limits scalability. So there is no contradiction if someone is a profitable illiquid instrument trader making nice, but capped profits.

Where is the catch? Thanks.
More...

Not sure I understand the question. Can you word it differently? Are you asking which is better to trade liquid vs illiquid?
 
Quote from Maverick74:

Not sure I understand the question. Can you word it differently? Are you asking which is better to trade liquid vs illiquid?
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Let's say the trader X is consistently profitable trading the ES with ACD (or with any other method for that sake). As the ES is a very liquid contract, trader X can scale up, as his consistent profits build up, and his position size will grow from 1 contract in the beginning to 1000's of contracts a year later (especially, as ACD requires wide stops, he can scale in easily). Profits of the trader X will be enormous. When liquidity of ES is not enough for him, he can start trading es correlated instruments based on signals from ES to absorb liquidity they offer, etc. He'll become the master of markets, so to speak.

Trader Y trades illiquid stocks, and although he is good in determining direction, he can't open large positions. He is consistently statistically profitable, but his profits are limited.

Trader Y's story sounds more plausible to me than the story of the trader X. Or do I misunderstand this completely?

What I actually mean is that if a person can trade ES consistently profitable, he can buy half of the world, but I haven't heard such news yet.
 
Quote from boba15:

Let's say the trader X is consistently profitable trading the ES with ACD (or with any other method for that sake). As the ES is a very liquid contract, trader X can scale up, as his consistent profits build up, and his position size will grow from 1 contract in the beginning to 1000's of contracts a year later (especially, as ACD requires wide stops, he can scale in easily). Profits of the trader X will be enormous. When liquidity of ES is not enough for him, he can start trading es correlated instruments based on signals from ES to absorb liquidity they offer, etc. He'll become the master of markets, so to speak.

Trader Y trades illiquid stocks, and although he is good in determining direction, he can't open large positions. He is consistently statistically profitable, but his profits are limited.

Trader Y's story sounds more plausible to me than the story of the trader X. Or do I misunderstand this completely?

What I actually mean is that if a person can trade ES consistently profitable, he can buy half of the world, but I haven't heard such news yet.
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That's not how trading works. The more liquid instruments such as ES, EuroDollars and Bunds are much more efficient and harder to trade flat price. Generally speaking, the more liquid products offer more edge for spreaders then for flat price.

Andy Rotter years ago turned something like 50k into few hundred million trading Bunds. This was "before" bunds became as liquid as they are today. The fact of the matter is, liquidity is very misleading. Any product can be liquid for a specific moment in time but when the liquidity disappears, there is none. You can just swing 10k lot of ES back and forth. It's not going to work.

In fact, the most money made today is by the HFT's in the more illiquid stuff trading one lots millions of times a day. That is more efficient then trading a million lot position once.

Not sure if this answered your question.
 
Quote from Brass:

Any relation to Paul?
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My mistake. Paul rotter. I was actually thinking of Andy Krieger. Another wunderkind who turned nothing into 100's of millions trading currencies.
 
Quote from Maverick74:

My mistake. Paul rotter. I was actually thinking of Andy Krieger. Another wunderkind who turned nothing into 100's of millions trading currencies.
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Okay, but Paul Rotter said the following in an interview in 2010:

"...I am still trading mainly the Bund and Bobl, but also heavily in the Eurostoxx because it is very liquid most of the time. Generally, I like markets with high liquidity..."

http://www.traderdaily.com/08/insight-from-the-flipper-catching-up-with-paul-rotter/
 
Quote from Brass:

Okay, but Paul Rotter said the following in an interview in August 2010:

"...I am still trading mainly the Bund and Bobl, but also heavily in the Eurostoxx because it is very liquid most of the time. Generally, I like markets with high liquidity..."

http://www.traderdaily.com/08/insight-from-the-flipper-catching-up-with-paul-rotter/
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Yes. He is a high frequency trader and major spreader. As I stated above, that is what works in those markets. He now runs a run and his returns are not anywhere near what they were 10 years ago. Probably somewhere around 10% to 15%.
 
Quote from Maverick74:

That's not how trading works. The more liquid instruments such as ES, EuroDollars and Bunds are much more efficient and harder to trade flat price.
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Yes, maybe, but ACD is about direction, isn't it?

And if you someone magically knows the ES is going down next hour, he can open virtually unlimited position with limit orders when ES is temporarily going against him, right?
 
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