The ACD Method

Thanks for posting the youtube videos Quon.

SWC correlates high with the Australian dollar and market EWA,FXA

It is at least 80% positively correlated for the last 100 days with
CF TX PKX RIO MSB
GORO NOR TRS LNN CNH
MTW CAT

The above stocks all have a 30 day RS > 35 and a 5 day RS > 50
yet still this area isnt performing well. But, I think that is your point in that
the sector doesnt have to be tearing it up as long as the spread increases.
I am tryng to get a grasp of this way of thinking.

I would like to get a feel for how this type of pair trading works.
Do you know of a free tool that I could use to "follow" the ten stocks
charted as a pair trade with SWC the short leg and the others long?
Thanks.
 
Quote from Maverick74:

Shan, I don't think anyone wants to talk about psychology. LOL.
More...

Wasn't sure I had a ton to add on the subject, but I meditate daily, helps me to remain logical in emotional situations, but as I was one of the few chiming in with Shan looking for some help with regard to emotional states and their effects, I'm not sure how helpful this is. LOL

Also a big fan of Taoist philosophy. Totally relates to trading in my opinion. In Taoism, the "un-namable" or "10,000 things" is like the market. The Tao is often described as a river which one must not attempt to navigate, but instead simply allow to flow as it will. Hardship only comes to you when you try to fight the natural flow of the river.

An example is rapids in a river flowing over rock. The river doesn't try to go through the rock, rather it simply flows over and around the rock. As humans we're often taught to "attack our problems HEAD ON." This would be discouraged in Taoism as a waste of energy. Simply work with the "obstacle."

Not sure if anyone is seeing how this relates, but it's sure helpful for me.

Regarding the theme of "not fighting the river/market" I'd say buy strong, short weak. Work with the market in front of you, not the one you "hope" for. Don't sell bonds if you typically buy stocks. Some of these are probably cliche, and most have been covered here in this thread, but it's just something that helps to keep me mindful.


------------------------------------------
A Taoist story tells of an old man who accidentally fell into the river rapids leading to a high and dangerous waterfall. Onlookers feared for his life. Miraculously, he came out alive and unharmed downstream at the bottom of the falls. People asked him how he managed to survive. "I didn't struggle," he said. "I accommodated myself to the water and just went with its flow."
 
Quote from eurusdzn:

Thanks for posting the youtube videos Quon.

SWC correlates high with the Australian dollar and market EWA,FXA

It is at least 80% positively correlated for the last 100 days with
CF TX PKX RIO MSB
GORO NOR TRS LNN CNH
MTW CAT

The above stocks all have a 30 day RS > 35 and a 5 day RS > 50
yet still this area isnt performing well. But, I think that is your point in that
the sector doesnt have to be tearing it up as long as the spread increases.
I am tryng to get a grasp of this way of thinking.

I would like to get a feel for how this type of pair trading works.
Do you know of a free tool that I could use to "follow" the ten stocks
charted as a pair trade with SWC the short leg and the others long?
Thanks.
More...

Thinkorswim has free prophet charts that have that feature.

There are alot of ways to put on that trade, you just have to know what idea you are expressing!

Here's a good article on spreading: http://dynamichedge.com/2010/06/29/what-is-spread-trading/
 
Quote from Quon:

Wasn't sure I had a ton to add on the subject, but I meditate daily, helps me to remain logical in emotional situations, but as I was one of the few chiming in with Shan looking for some help with regard to emotional states and their effects, I'm not sure how helpful this is. LOL

Also a big fan of Taoist philosophy. Totally relates to trading in my opinion. In Taoism, the "un-namable" or "10,000 things" is like the market. The Tao is often described as a river which one must not attempt to navigate, but instead simply allow to flow as it will. Hardship only comes to you when you try to fight the natural flow of the river.

An example is rapids in a river flowing over rock. The river doesn't try to go through the rock, rather it simply flows over and around the rock. As humans we're often taught to "attack our problems HEAD ON." This would be discouraged in Taoism as a waste of energy. Simply work with the "obstacle."

Not sure if anyone is seeing how this relates, but it's sure helpful for me.

Regarding the theme of "not fighting the river/market" I'd say buy strong, short weak. Work with the market in front of you, not the one you "hope" for. Don't sell bonds if you typically buy stocks. Some of these are probably cliche, and most have been covered here in this thread, but it's just something that helps to keep me mindful.


------------------------------------------
A Taoist story tells of an old man who accidentally fell into the river rapids leading to a high and dangerous waterfall. Onlookers feared for his life. Miraculously, he came out alive and unharmed downstream at the bottom of the falls. People asked him how he managed to survive. "I didn't struggle," he said. "I accommodated myself to the water and just went with its flow."
More...

Some interesting insight! I like it :)

One thing that has helped me a ton is visualization. At the end of the day I go through my execution and trades and run through what I did wrong and right and visualize how I should have executed in that scenario. If I executed correctly I reinforce it by visualizing it again. Before I go to bed I visualize my trading day...not specific things, but general things like how I will feel, execute, react. It has helped me a ton in getting rid of bad habits and reinforcing good ones!
 
Quote from Shanb:

Some interesting insight! I like it :)

One thing that has helped me a ton is visualization. At the end of the day I go through my execution and trades and run through what I did wrong and right and visualize how I should have executed in that scenario. If I executed correctly I reinforce it by visualizing it again. Before I go to bed I visualize my trading day...not specific things, but general things like how I will feel, execute, react. It has helped me a ton in getting rid of bad habits and reinforcing good ones!
More...

Good stuff here, I like it. Something I used to do a ton was draw A ups and A downs, like literally take some graph paper, and draw the check mark type action of a failed A down for instance. Similar to what you're saying here Shan. Trying to train my mind to see what the price action I wanted would look like, so I could recognize it during the trading day.
 
Quote from Quon:

Wasn't sure I had a ton to add on the subject, but I meditate daily, helps me to remain logical in emotional situations, but as I was one of the few chiming in with Shan looking for some help with regard to emotional states and their effects, I'm not sure how helpful this is. LOL

Also a big fan of Taoist philosophy. Totally relates to trading in my opinion. In Taoism, the "un-namable" or "10,000 things" is like the market. The Tao is often described as a river which one must not attempt to navigate, but instead simply allow to flow as it will. Hardship only comes to you when you try to fight the natural flow of the river.

An example is rapids in a river flowing over rock. The river doesn't try to go through the rock, rather it simply flows over and around the rock. As humans we're often taught to "attack our problems HEAD ON." This would be discouraged in Taoism as a waste of energy. Simply work with the "obstacle."

Not sure if anyone is seeing how this relates, but it's sure helpful for me.

Regarding the theme of "not fighting the river/market" I'd say buy strong, short weak. Work with the market in front of you, not the one you "hope" for. Don't sell bonds if you typically buy stocks. Some of these are probably cliche, and most have been covered here in this thread, but it's just something that helps to keep me mindful.


------------------------------------------
A Taoist story tells of an old man who accidentally fell into the river rapids leading to a high and dangerous waterfall. Onlookers feared for his life. Miraculously, he came out alive and unharmed downstream at the bottom of the falls. People asked him how he managed to survive. "I didn't struggle," he said. "I accommodated myself to the water and just went with its flow."
More...

Great story! Too many people try to "make" the market do what they want it to. Trying to pick tops and bottoms. Basically attacking the river and showing it whose boss. LOL. If you just listen to the market instead of arguing with it, you will "flow" with it much easier.

I think fundamental guys have a hard time with this. They only want to see where the market "should" be based on some valuation level. But the market is always exactly where it should be.
 
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