The ACD Method
- Thread starter sbrowne126
- Start date
So a couple of things about the ISEE and analyzing any kind of data in general. One of the things I have noticed about the ISEE is that you need to be careful when readings jump from one extreme to another in a short amount of time. I have the found the ISEE to be the most reliable when the extreme reading comes after a prolonged move. Such as at the end of the recent rally. To generate a extreme reading on the short side after only a month is something I would discount.
Having said that, it's obvious that from that reading how quickly sentiment can change and when people are that scared that fast, you should expect some kind of bounce. Let me also warn and re-iterate what Fisher said on the last webinar when I asked him about sentiment readings. I, nor he, would NEVER make a trade solely based on ISEE readings. It's simply one variable among many. I watch the ISEE readings because it gives you a good feel on day to day sentiment which you can cross reference with your number lines or A levels. But ALL my trading decisions are number line based. Not on sentiment.
A few things here. One, don't worry about what "Mark" likes to do or doesn't do. He is playing with a few hundred million, you're not. You have to trade the way you feel comfortable with.
Second, how you use time stops depends on so many variables we honestly can't list them all here. There is no formula. I have my theories about time stops and how I like to use them and everyone else has theirs. Stops are different depending on product, time frame, time of day, number line, A levels, etc. There isn't one set rule for everything. Same goes for taking profits.
As to why Mark closed out his Gold position, he made that very clear on the webinar that his reasons which he articulated "before" he put on the trade was to get long Gold at a level where he thought the ES was going to sell off from and he wanted to cover the Gold when the ES traded back to the top of the OR. This was because Gold was trading inversely with the spoos. Based on that hypothesis, his entry and exit was clearly defined before he put on the trade and he executed the trade exactly how he said he would.
One last point regarding stops. When you enter a trade, any trade, there needs to be a "reason" for that entry. When that reason is violated, you should not be in the trade anymore. You need to know this reason "before" you get in.
Bonds confirmed for me around 142 to 143 on the 30 day and we got nice follow through on that confirmation. That confirm also coincided with the break of the QTR A down. I said this on another thread I think but I thought or predicted or mused that all assets would go down together just as they all went up together. We had a strong bull market in equities, bonds and Gold that all went up tick for tick. Even though all three asset classes contradicted each other. Now we are seeing Gold get dumped, bonds get dumped and stocks get dumped all together. The herd runs in and the herd runs out.
I have said this before and I will say it again. I don't care if you guys never trade a currency in your entire life, for the love of God, please watch them. Every major move in the last 200 years has been preceded by action in the currency markets. Your trading will improve immensely if you start to watch and track what's going on in currencies. I absolutely promise you that. I can't think of a single macro hedge fund manager that I respect that does not watch them like a hawk. And yes, I track the number lines on all the currencies. Take a look at the Dollar Peso. And then mosy on over to the EUR/AUD. Watch these guys.
Mav and fellow stock traders,
I'm on my third read of the thread and it seems like you have a pretty pessimistic view regarding day trading stocks even using ACD. Am I right that you think the best way to use ACD is to swing trade, has HFT killed day trading completely? If someone was getting into the game now what arras would you tell him to work on?
Thanks
I'm on my third read of the thread and it seems like you have a pretty pessimistic view regarding day trading stocks even using ACD. Am I right that you think the best way to use ACD is to swing trade, has HFT killed day trading completely? If someone was getting into the game now what arras would you tell him to work on?
Thanks
I think proficient daytrading requires a technological edge, not a strategy edge. Market makers have that edge. HFT's have that edge. Order floor traders have that edge. The quality to noise ratio is so high intra-day it's deafening. Not to mention your risk to reward ratio is way out of whack. By definition you have a fixed amount of time to hold on to winners. Then add in the transaction costs. I'm not saying you can't do it and it really has nothing to do with ACD, more of a general question. It's all about finding value. Your time and capital are opportunity costs. You give them up at a cost. It's all a function of how much are you willing to pay for that value. Hope this helps.
On a side note, I remember reading one of Covel's books a while back and he had a nice stat in there showing a long term graph of an average daytrader vs a long term trader and he graphed the effect the daily commissions had on your long term p&l curve vs the long term trader and the statistic was absolutely staggering. I'll try to locate it when I get a chance.
Mav always answers the questions that people ask him on here with great responses...if it means anything to him he has built up "good karma" lol....
Is Don's Opening Only strategy still profitable in 2013? What is your take/opinion on a strategy like that here and now? The NYSE still has a few human specialists around that behave in certain ways..
Is Don's Opening Only strategy still profitable in 2013? What is your take/opinion on a strategy like that here and now? The NYSE still has a few human specialists around that behave in certain ways..
Ugh, I may have to e-mail Michael Covel and ask him where I saw it. I have a bunch of his books. I know that I saw the graphic somewhere. Still trying to dig it up.
This graphic I'm attaching isn't it, but it gives you an idea of how you could create the data yourself.
