The ACD Method
- Thread starter sbrowne126
- Start date
As the number of symbols tracked increases, you will have to try and simplify the task at hand.
Some examples;
From memory, Fisher has something like 16 scenarios described for points for the number line. Way back in this thread Mav said he had simplified this. Skip the detail, what Fisher describes is some very basic price action, eg price goes one way and confirms, price goes one way, rejects, then goes the other and confirms, and then price goes one way, confirms, then goes the other and confirms. Break it down in that fashion and create your own scoring system, then evaluate to see what is a confirmation in your system and that you are not coming late to the party.
Automate where possible. I use Sierra Charts spreadsheet to get me closing price, then use Excel to determine if price closed in the OR, or if price closed for an A up or A down. Note that I still look at the charts to determine what points I will award, but not having to use the cursor to determine if price closed 1 tick above the OR saves me time. I could just use the SC spreadsheet to get the level, but then I'd be clicking between spreadsheet and chart so I prefer to use Excel to minimise this.
If your software has a function to highlight the closing bar for Globex symbols or FX, then you will not have to use your cursor to identify which is the closing bar. That saves you precious time on every symbol, because you see the closing bar at a glance.
Now I could automate the awarding of points with some effort, but I avoid this because looking at the charts gives me a feel for what price is doing. As a simple example, when I went back a few months and scored X, I noticed that more than half the time (in that period), when price broke out in one direction, it just kept going in that direction. I recall thinking that would be a breakout traders dream. Even if you do not day trade, you could use that knowledge to get yourself a better entry.
Some examples;
From memory, Fisher has something like 16 scenarios described for points for the number line. Way back in this thread Mav said he had simplified this. Skip the detail, what Fisher describes is some very basic price action, eg price goes one way and confirms, price goes one way, rejects, then goes the other and confirms, and then price goes one way, confirms, then goes the other and confirms. Break it down in that fashion and create your own scoring system, then evaluate to see what is a confirmation in your system and that you are not coming late to the party.
Automate where possible. I use Sierra Charts spreadsheet to get me closing price, then use Excel to determine if price closed in the OR, or if price closed for an A up or A down. Note that I still look at the charts to determine what points I will award, but not having to use the cursor to determine if price closed 1 tick above the OR saves me time. I could just use the SC spreadsheet to get the level, but then I'd be clicking between spreadsheet and chart so I prefer to use Excel to minimise this.
If your software has a function to highlight the closing bar for Globex symbols or FX, then you will not have to use your cursor to identify which is the closing bar. That saves you precious time on every symbol, because you see the closing bar at a glance.
Now I could automate the awarding of points with some effort, but I avoid this because looking at the charts gives me a feel for what price is doing. As a simple example, when I went back a few months and scored X, I noticed that more than half the time (in that period), when price broke out in one direction, it just kept going in that direction. I recall thinking that would be a breakout traders dream. Even if you do not day trade, you could use that knowledge to get yourself a better entry.
I'm sure I've gone over this before but I'll mention it again. I deeply value the thorough analysis that goes into number line calculation as I believe that is what sets this approach apart from any other forms of analysis. Yes, it's a lot of work but I feel it's definitely worth it. As some of you know, I use to make my living tape reading listed stocks. I became very adept at recognizing patterns. What I've essentially have done is taken tape reading from the intra-day time frame to the macro time frame. I look at number lines as another form of tape reading. This is why I would NEVER automate the number line process for the sake of expediency. I should also add that I do NOT have firm rules like Fisher does. For example, if XYZ closes inside the OR today I may score it one way today and another way tomorrow. Why? Because I'm looking at the tape. The tape is different. It's not the same. This type of "marginal analysis" pays off big time. And like the above poster mentioned, looking at each of these charts allows you to get intimately involved with the price action. It's EXACTLY why I recognized X was going to break out while the actual price chart looked like it was range bound and maybe even in a downtrend.
Tape reading is an unbelievable skill. It's the closet thing to magic in trading. I remember when I first moved to NY and watched Adam my mentor read the tape. I would be staring at the chart and he would look at the tape, he would get long almost precisely to the penny where the stock would break out. I would staring at the chart thinking that stock was weak because it was below some stupid moving avg or in a downtrend or failing at resistance. I couldn't understand how he could know that the stock was going to break out. Well, for one, he didn't even have the chart up, he simply looked at the tape and the patterns it was exhibiting. I was memorized. Through lots of hard work, I was able to learn how to do that. And like many on here, was very disappointed when tape reading kind of died out over the years as HFT became more active and specialists went away. Well, I've brought it back. And it's working better then ever. And it's doing exactly for me on a macro basis what it did for me as an intra-day trader. So put in the work, don't take short cuts and practice, practice, practice.
HFT didn't kill tape reading.
It just increased the speed of it
It just increased the speed of it
Great post.
I'm the same way and it's why I enjoy this thread even though I'm not an ACD user. I do about an hour and a half of work a night by hand writing out my numbers and key levels the next day. I use one moving average and that's a simple 5 period average. I only use daily charts but trade intra-day quite well. All my numbers allow me to create a bigger picture which then allows me to watch the tape for the weakness or strength that I want. I could care less about an indicator, CNBC, etc. the price gives me 99% of what I need.
Quote from traderslair:
HFT didn't kill tape reading.
It just increased the speed of it
Well it took the specialist out of the game and that is what we traded off of.
Yes, your old trading job is replaced with a computer program, and the specialist is replaced too
You could detect a market sentiment or a breakout or support level on the ticker in the past. In the old days, big traders also placed bids and offers to pull them just before they got filled. You can still see what real orders are on the bid and ask it just got a little harder. It's still possible on the bid/ask to detect a real break out or not. Now you have robots detecting other robots to lure them in. It's called sniffing.
I personally have a problem with people who say that trading got killed because of HFT. You need volatility for position trading, don't tell me stocks or instruments don't move anymore
And if markets wouldn't move, we would be all writing options. Oh wait, then they wouldn't have any value... D'oh!
Quote from traderslair:
Yes, your old trading job is replaced with a computer program, and the specilist is replaced too
You could detect a market sentiment or a breakout or support level on the ticker in the past. In the old days, big traders also placed bids and offers to pull them just before they got filled. You can still see what real orders are on the bid and ask it just got a little harder. It's still possible on the bid/ask to detect a real break out or not. Now you have robots detecting other robots to lure them in. It's called sniffing.
I'm personally have a problem with people who say that trading got killed because of HFT. You need volatility for position trading, don't tell me stocks or instruments don't move anymore
You're putting words in my mouth. I never said HFT killed trading. I said what "we" did does not work anymore. And what we did had nothing to do with sentiment or support and resistance levels. Nor did we care about "real" orders. I personally think trading is better now then it's ever been and personally I'm doing better now then I did then.
In case you haven't noticed, I'm been posting on this thread for 4 years and have gone over a lot of trades in great detail. If this thread is not evidence of the opportunity out there, I don't know what is.