The ACD Method

Maverick74 said:
So I sent Hoop an e-mail two days ago talking about the market and currencies in particular. The market looked tired and maybe about to roll over. God knows everyone on ET is still trying to topcall this thing. But I noticed a huge surge of money flows into the risk currencies. I've talked about this for a while on here and I'll continue to do so, the best tells in the overall market come from FX. Why? Because before money can flow into AAPL or GOOG or the ES, it has to flow through the currencies. Well, FX land exploded and I told him it looked like the spoos might pop for another leg higher. And sure enough, that is exactly what happened. Watch those currencies guys. Lots of great tells in there. Copper is acting well too. Confirmed on my 30 day.
More...

Thanks

Why does any monies that want to get long any equities "flow" or trade at FX first ?
 
trilogic said:
Thanks

Why does any monies that want to get long any equities "flow" or trade at FX first ?
More...

It's about economics. Money doesn't really flow into equities. It flows into risk. The highest risk asset sets the market price for risk which we will call the marginal product of risk. The highest risk asset sets the price because being at the margin, it's the first asset to get sold in a risk averse environment. Being the highest risk asset, it also has to produce the highest rate of return. Therefore this "risk" asset is where money flows to capture margin. Don't worry about the type of asset or which country, that will only confuse you. Just think of risk as a stand alone product that openly trades in the marketplace.

So logic would tell us that when capital seeks out risk and flows into regions where that return is provided, then capital will be allocated into various risk assets based on different levels of risk appetite. The same is true when risk is sold and liquidity is sought. Liquidity is synonymous with safety or protection. So by watching where capital is flowing around the world you can deduce what the risk appetite is for capital and from there it's a relative value game. Where can one earn a given return with the least amount of risk.
 
Maverick74 said:
It's about economics. Money doesn't really flow into equities. It flows into risk. The highest risk asset sets the market price for risk which we will call the marginal product of risk. The highest risk asset sets the price because being at the margin, it's the first asset to get sold in a risk averse environment. Being the highest risk asset, it also has to produce the highest rate of return. Therefore this "risk" asset is where money flows to capture margin. Don't worry about the type of asset or which country, that will only confuse you. Just think of risk as a stand alone product that openly trades in the marketplace.

So logic would tell us that when capital seeks out risk and flows into regions where that return is provided, then capital will be allocated into various risk assets based on different levels of risk appetite. The same is true when risk is sold and liquidity is sought. Liquidity is synonymous with safety or protection. So by watching where capital is flowing around the world you can deduce what the risk appetite is for capital and from there it's a relative value game. Where can one earn a given return with the least amount of risk.
More...

Thanks
 
Maverick74 said:
The problem is, we have number line confirmations across the board. You usually never want to fight the number lines. The best short sales are when we get higher highs in price and declining number lines and vice versa on the downside. Obviously the market is overbought and has been for a while, but there is probably a better way to play a market short then simply selling the ES short. For example go after a lagging sector or a handful of equity names that are lagging. If you really are bearish, sell copper. It did just confirm but on the year overall it's been VERY weak and it has rallied over 30 cents the last few months. But the ES is at a +27 and the Russell at a +18 and XIV is at +16 although that has come off from the high 30's.
More...

Absolutely agree which is why I would need a good risk/reward to put the trades on. I'm looking at a couple ways of expressing my idea. Shorting momo stocks, or going long volatility. Ideally I'd like the next couple of days to play out with the markets moving higher but the nl not confirming, and then getting the gap up on Monday and having a good reference point to get out if I'm wrong. I'll post here if it plays out, been quite in here lately.
 
justrading said:
Looked up his handle, it's mfbreakout. He hasn't posted here since January 2013, so at least the ET folks have been spared the con.
More...

justrading said:
Not suggesting stocks over commodities, rather taking on less leverage. Trading the commodity ETF is cheaper than the commodity. Or trade FX, you can risk ridiculously small sums. People do underestimate the damage that leverage can do to your account.

I see threads here where people are encouraged to learn how to trade, using futures. I followed a thread on the BMT forum where the world's best CL daytrader had loads of loyal followers losing money everyday, until one by one they fell by the wayside, apologising that they were not good enough. You can only imagine the psychological damage they sustained following that charlatan. When I analysed his trades for 1 day and pointed out that he was not trading ACD, his loyal followers attacked me. True believers don't like facts because they interfere with the good feelings that come from belief.

I don't have a favourite chapter. Any book is much longer than the essence of the message conveyed. I made notes and refer to them. How much would you pay for Fisher's book if it was 10 A4 pages long? My summary of the first 1,000 pages of this thread was 36 pages long, edited down to 15 pages. I need to update that, there has been much that is useful since then.
More...


He's baaaaaack.......:)
 
justrading said:
There's a whole new bunch of people joined here since he 'left' who've never heard of him. He should build up a loyal following fairly quickly. :D
More...

This is why I encourage all users of ET to become very familiar with the search function in the upper right hand corner. :)
 
You must log in or register to reply here.
Back
Top