The ACD Method

[Maverick74]

Quote from justrading:

Mav, my only concern is that a great thread will become fragmented. I have only skimmed dedicated threads and they seem to be mainly about making calls, which we seem to have avoided thus far.

Yeah I've tried to keep the "making calls" out of this thread and that is certainly not what I would want on other threads discussing ACD. If any one of you are wondering why I have objections to making calls it's simply because I don't think it's a value add. I think discussing process is much more important. Nobody learns anything by saying I think this is the top. Or I short the ES here and covered 2 handles lower. It takes the focus away from the process and moves it to the mouse clicking part.

When I do put trades out on here I'm doing it to draw people's attention to something specifically that is happening in the market. They usually are of a longer term nature. Not the "if you blinked, you missed it" variety. I also like to point out markets that I feel no one on ET is talking about. When I mentioned the number line confirm on GBP/AUD it was not to call out a trade, but to show people what they are not looking at when they are transfixed on only the Euro or the ES or oil or AAPL, etc. There is a whole world of markets out there and ACD helps one find opportunities where no one else is looking. Try typing in GBP/AUD in the ET search box and tell me how many hits you get. Just a few brief mentions. Well, it's the biggest mover out there right now in FX land.

Again, thnx for the input.

 

[Maverick74]

Quote from kinggyppo:

when is the book coming out, you have a gift for writing and some interesting experiences even if you did an ebook, it would be a gift especially to newer guys. Peace.

A book? You mean more like a 30 volume collection. LOL. I'm sure some point down the road I'll write a book on this. I'll get Mark to write the forward. I always thought Mark was going to write a follow up book.

 

[cdcaveman]

Quote from Maverick74:

I also like to point out markets that I feel no one on ET is talking about. When I mentioned the number line confirm on GBP/AUD it was not to call out a trade, but to show people what they are not looking at when they are transfixed on only the Euro or the ES or oil or AAPL, etc. There is a whole world of markets out there and ACD helps one find opportunities where no one else is looking.

Again, thnx for the input.

except for fixed income.. haha

 

[Maverick74]

One thing I forgot to mention on Thursday was the spike in the ISEE. We finally got a huge spike on the total ISE index over 200. That was the highest reading of 2013. The only equity reading got up to 238 which actually was the 2nd highest reading. And the index and etf reading got above 150 which is nuts. That one is usually the low one around 50 as it's more often then not used for hedging. But this shows people actually using the index to actually buy calls vs puts. Honest to God this is getting nuts with the over optimism. These readings are really high. It's not a perfect indicator, but in the past it has usually marked the end of long term moves within 3 trading days.

For the record, I would NOT short the market based on this alone. It's just something to be aware of.

 

[cdcaveman]

Quote from Maverick74:

One thing I forgot to mention on Thursday was the spike in the ISEE. We finally got a huge spike on the total ISE index over 200. That was the highest reading of 2013. The only equity reading got up to 238 which actually was the 2nd highest reading. And the index and etf reading got above 150 which is nuts. That one is usually the low one around 50 as it's more often then not used for hedging. But this shows people actually using the index to actually buy calls vs puts. Honest to God this is getting nuts with the over optimism. These readings are really high. It's not a perfect indicator, but in the past it has usually marked the end of long term moves within 3 trading days.

For the record, I would NOT short the market based on this alone. It's just something to be aware of.

did you just say buy vix calls? haha i've been waiting for it to crack for a while

 

[NKVI>NH]

does anyone here trade asia markets? volatility is much higher here.

i will read what ACD is and see if it can help me with my trading.

thank you maverick.

 

[justrading]

Quote from NKVI>NH:

does anyone here trade asia markets? volatility is much higher here.

i will read what ACD is and see if it can help me with my trading.

thank you maverick.

I used to trade the Thai market some years back.

I stopped and switched to U.S. markets because of restrictions on foreigners shorting Thai stocks. I was advised by my broker that if I shorted stocks, I would have to close the position by settlement day, T+3.

However, if I opened an account in the name of a Thai national, I could hold as long as I wanted to or the lender wanted the stocks back, whichever came first.

I said to hell with this and switched.

 

[Maverick74]

Quote from NKVI>NH:

does anyone here trade asia markets? volatility is much higher here.

i will read what ACD is and see if it can help me with my trading.

thank you maverick.

I've been told if you just go over the first 500 pages, it will provide a nice "brief" introduction to the methodology.

Welcome aboard.

 

[partha]

Mav,

In all the time you have been following ACD, Has a market correction (I am using a drop of over 5%) occurred with a positive 30day NL ?

Currently the 30day on the SPX etc are positive (methodology could be wrong ... but still) over a threshold of 9. I am beginning to wonder from a NL perspective what you look for (ISEE is one marker you mentioned).

In my short experience using it with stocks, the NL always telegraphs a change in sentiment with stocks in both directions.

Thanks,
Partha

 

[justrading]

Quote from NKVI>NH:

does anyone here trade asia markets? volatility is much higher here.

i will read what ACD is and see if it can help me with my trading.

thank you maverick.

To add, and this is with regard to the Thai market, I have not looked at the Hang Seng or Nikkei.

Yes, volatility appears to be higher, and if you trade the index (Index futures in Thailand have a market, but volumes are low) you get that. But, as an example the premier index here is the SET50, which as it states is an index of 50 stocks, the next being the SET100.

On any given day with a 1% move in the index, the distribution of individual stock price changes tends to be fairly narrow, because of the small population. Outliers are relatively infrequent.

On the other hand the S&P 500 can move 0.5%, but in that universe would be stocks that moved significantly more, but are not reflected in the move because of the large number of constituents. That does happen in the Thai market, but it is quite exceptional and tends to be earnings related rather than at other times, major announcements excepted.

In essence, Hang Seng and Nikkei aside, you are dealing with small markets.

That said, if you want to short any Asian market that has gone sky high because of QE, feel free because those markets will see a drop once tapering starts. The really hot money has gone already, so the drop would probably not be as much as if you had shorted before September.