The ACD Method

Quote from Quon:

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.
More...

I do my charts manually in Excel by entering the relevant data. It sure does give me a level of intimacy with the numbers that slick charting software can never replicate. The irony is that I don't actually use the charts for anything important, but just the discipline of doing it helps me stay focused.

In my experience, there is an inverse relationship between the level of ownership you have over your trading strategy and the extent to which you will deviate from it. When you own the strategy completely (or it owns you, whichever), you are literally almost incapable of deviating from it because doing so would be a betrayal of yourself. Ultimately, we each have to become our own "guru".

The other thing I would add is that to the extent you are comfortable with the fact that trading is about probabilities, not certainty, you will deviate less from your strategy. Since you know you will never be perfect, you don't even try, since you know that deviation is as likely to hurt you as to help you.
 
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...
Thanks for presenting this spread scenario. I understand the value of correlation for hedging, but why would you qualify your spread candidates using correlation as a filter? If you are trading the trend of the spread ("spread increases"), and you are looking for relative strength, how would the high correlation contribute to your analysis?
 
Quote from logic_man:

In my experience, there is an inverse relationship between the level of ownership you have over your trading strategy and the extent to which you will deviate from it. When you own the strategy completely (or it owns you, whichever), you are literally almost incapable of deviating from it because doing so would be a betrayal of yourself. Ultimately, we each have to become our own "guru".
More...

Interesting, my lack of ability to code thinkscript has forced my hand with regard to manual charting, excel, etc, but I think you're right, and I do feel like I "own" my strategy more when I'm sorting/filtering and drawing my levels in.

Good point.
 
"The wind was flapping a temple flag, and two monks were arguing about the flag. One said, "The flag is moving." The other said, "the wind is moving." They could not agree, no matter how hard they debated. The sixth patriarch, Eno, happened to come by and said, "Not the wind, not the flag. It is the mind that is moving!"
 
Quote from Trader13

Thanks for presenting this spread scenario. I understand the value of correlation for hedging,
but why would you qualify your spread candidates using correlation as a filter? If you are trading the trend
of the spread ("spread increases"), and you are looking for relative strength, how would the high correlation contribute to your analysis?

__________________________

Long XME/ Short SWC

If I thought XME ( or a more targeted, "X" for example) was beaten down enough, and I was bullish on it ,
I would still be concerned about China, US dollar, SP500 etc... Trust me I would.
I would want China, US dollar, SP500 etc..to have a similar effect on the short leg and of course be bearish on it, in this case SWC.

I would have to know( or think) that the positive correlation exists for the reasons I want to mitigate. Staying within the same asset class,
sector, industry seems rght by me in these cases.
I wouldnt take a biotech that correlates +90 with XME because I wouldnt
understand why it does.
If each were breaking trendlines or something like that in the correct
direction that would be a good entry.

This example was a generality of a couple observations/concepts from people here recently. I have ripped off ideas
presented by Maverick on this thread so hopefully I havent botched it too much.
This not my trade or theirs. Spreads are new to me so Please by all means....... "Jump right in here guys."
 
Allow me to add that the criterea for relative strength is applied only
to find the highest RS for the long candidates highly correlated to SWC.
My correlation criterea is direction only . ie: SPY and UPRO correlate 100% yet UPRO has 3x volatility/atr etc...
I remember Maverick recommending to go long something stong, maybe breaking out. The longs I listed here arent very strong.

Anyway AAPL puts and calls on anyones ACD watchlist ?
 
Quote from kinggyppo:

"The wind was flapping a temple flag, and two monks were arguing about the flag. One said, "The flag is moving." The other said, "the wind is moving." They could not agree, no matter how hard they debated. The sixth patriarch, Eno, happened to come by and said, "Not the wind, not the flag. It is the mind that is moving!"
More...

"The sun made a bet with the north wind one day. He says I bet I can make that man take off his jacket. I'll take that bet says the north wind. And so the north wind blew and blew. The harder he blew, the tighter the man held on to his jacket. Then the sun came out and warmed up the sky. Man took off his jacket."
 
chart.ashx


chart.ashx


chart.ashx


Anyone see a pattern here?
 
A lot of stocks making new 52 week highs today. A word of advice for any newbies on this thread that are struggling making money trading. Take time every evening to go over all the stocks making new 52 week highs. Go through all the charts night after night after night. Just doing that one thing will make a tremendous difference in your trading. There were quite a few today.
 
You must log in or register to reply here.
Back
Top