The ACD Method

[Quon]

Quote from Soon2Bgreat:

Mav - thanks for sharing. Very interesting and the points about risk management and overleveraging (imo simply the only fatal mistake a trader can make) are very valuable.

That said, I'd like to play devil's advocate for a bit. What I also found interesting was his interest in moving from daily charts to weekly charts. I've come across a few other people of the same mindset (some even suggesting monthly charts). This strikes me as a bit counterintuitive in that if you have an edge, you'd want to trade it as frequently as possible - is trading a longer timeframe an edge in and of itself? Certainly more difficult to prove it's not an edge.

Given he disregards EMH and given that (as another poster mentioned) he takes 2-3 big trades a year that largely make his numbers - even during a 30 year career is that enough to differentiate him from simply being the lucky trader?

...this is all a bit tongue in cheek as he's certainly made more money than I probably ever will and I largely agree with most of what he says.

Just my opinion, but I think the larger time-frame method is valid so long as you take each trade that your method lays out for you, (in order to replicate frequency as much as possible).

In The Logical Trader Fisher says that when something happens on a certain time-frame, it's valid, but when it happens on a larger time-frame it's even more impressive. I think that's the basic idea here. I fully expect larger time frames to become a part of my trading when the times comes that I'd like to stop putting in 80+ hours a week, until that time, I'll continue to work in multiple shorter time-frames.

I think last October Dennis Gartman was on Fast Money and there was some discussion about this around that fateful day when the market decided the summer correction was over. I seem to remember him talking about an outside day, and then later the possibility of an outside month, and how significant that was. That really stuck with me, and since then I've done some looking into such time frames, (even played with the notion of a decade long ACD). IMO there's no limit to the unit of time you wish to deploy ACD on.

 

[sarue]

Quote from mm19:

I can't see date 14/5 in article. Is 14/5 product of your analysis or I am missing something?

http://www.mcoscillator.com/learning_center/weekly_chart/a_seasonal_quandary/

Sorry, the May 14 date is actually in this article.

 

[ammo]

Quote from Soon2Bgreat:

Mav - thanks for sharing.
e - is trading a longer timeframe an edge in and of itself?

) he takes 2-3 big trades a year that largely make his numbers -

.

sort of answers your question.wouldnt see these trades on smaller timeframes

 

[Soon2Bgreat]

Quote from ammo:

sort of answers your question.wouldnt see these trades on smaller timeframes

You might be right, but Brandt typically references ~10 patterns that shouldn't be exclusive of shorter timeframes (according to his factor plan). Certainly possible they're more valid on the longer timeframe as Quon mentions.

 

[Maverick74]

Love the price action in ES. Opens down big, sweeps out the stops and then rebounds back to green. It's been doing this every night for two weeks. Taking out all the longs with stops on the swing lows. We still need to hold this level this week. If we don't close lower this week, we could see an explosive rally soon. Watch the number lines!

 

[Maverick74]

I'm going to start tracking a rolling 10 day volatility indicator per Chaos's suggestion. What I'm going to do is measure the actual confirmed A ups or A downs. So if over the last 10 days we had 3 A up and 2 A downs I'll assign a plus one to each A confirm. In this case it would be 5. I suspect when the number is 7 or higher it will forecast choppy trading ahead and when the number is 3 or lower, expect more follow through and more volatility.

 

[eurusdzn]

I am going to use Fridays NFP range( 6 trading days ago) of 1361 - 1389 ( ES) as a an opening range due to this significant event.
I have an Adown as of now and will remain biased that way until we trade up through 1389 .
A downside break of of 1340 would be where I am looking to sell. Stop on the other side of the 1340-1361 range is a long
way away. Maybe something clear will develop.
Trying to use ACD to not overtrade in this range in my daily timefarame, and, lean the right way but I guess
it is subjective and my bearish bias is showing. That said, a couple points up
I think would be a very good thing for the bears.

Of course Europe is a factor too.

 

[Maverick74]

Quote from eurusdzn:

I am going to use Fridays NFP range( 6 trading days ago) of 1361 - 1389 ( ES) as a an opening range due to this significant event.
I have an Adown as of now and will remain biased that way until we trade up through 1389 .
A downside break of of 1340 would be where I am looking to sell. Stop on the other side of the 1340-1361 range is a long
way away. Maybe something clear will develop.
Trying to use ACD to not overtrade in this range in my daily timefarame, and, lean the right way but I guess
it is subjective and my bearish bias is showing. That said, a couple points up
I think would be a very good thing for the bears.

Of course Europe is a factor too.

Are you watching the number lines?

 

[Quon]

Quote from Maverick74:

I'm going to start tracking a rolling 10 day volatility indicator per Chaos's suggestion. What I'm going to do is measure the actual confirmed A ups or A downs. So if over the last 10 days we had 3 A up and 2 A downs I'll assign a plus one to each A confirm. In this case it would be 5. I suspect when the number is 7 or higher it will forecast choppy trading ahead and when the number is 3 or lower, expect more follow through and more volatility.

Hey Mav,

This is interesting. I totally see how the larger the number, the greater the chop, but while I understand that a lower number would provide more follow through, I'm confused as to how a lower number would imply more vol.

Don't mean to pry too much, but any of your thoughts with regard to how the lower number would bring about more vol would be appreciated. I think this would be a fantastic way, (when combined with a strengthening number line) to determine when large moves were about to take place, (up or down). A sudden increase in the vol tracker would imply a corrective period, where a decrease would imply a forthcoming trend.

 

[Maverick74]

Quote from Quon:

Hey Mav,

This is interesting. I totally see how the larger the number, the greater the chop, but while I understand that a lower number would provide more follow through, I'm confused as to how a lower number would imply more vol.

Don't mean to pry too much, but any of your thoughts with regard to how the lower number would bring about more vol would be appreciated. I think this would be a fantastic way, (when combined with a strengthening number line) to determine when large moves were about to take place, (up or down). A sudden increase in the vol tracker would imply a corrective period, where a decrease would imply a forthcoming trend.

The lower number would indicate more inside days in the market (failed A ups and A downs). Usually inside days lead to outsized moves. So if we had a long stretch of days where the market was coiling with no A ups or A downs, I would think we would be more then likely to get vol expansion going forward. Same theme along the lines of the narrowing pivots and tight opening ranges.

We'll see how this plays out in real time. Again, as a stand alone indicator it might be moderately useful, but when combined with the number line and the macro ACD levels, it could be golden.