The ACD Method

[kinggyppo]

Hey King,

I actually believe a lot of this has already been priced in especially across European indices with investors already positioned for the relaxed credit conditions ahead. Most indices this morning are in the red at the moment which may be due to heightened expectations of an early rate hike.

Would love to hear your thoughts.

One issue for the bear case would be there is a lack of bonds to buy, that said this is a 6 month to a year trade, euro market isn't going up 10% today. Look at the price action in oil, everyone can agree there is too much oil sloshing around, by that logic the market should just efficiently mark oil to 30 and be done with it. My thought on this is that the large funds take weeks and even months to move in and out of positions. You can look at "insider monkey" to see how the larger hedge funds are positioned. VGK is a vanguard fund with good liquidity to track euro stock market. The other issue is that this may be only the first round of euro QE, crazy but that's where we are.

http://etfdb.com/etfdb-category/europe-equities/

 

[redbaron1981]

Yeah all very valid points King. I´d say the fund squaring positions are going to cause some long macro trends. Certainly worth watching the levels.

 

[DT3]

Thread has gone a bit quiet so I hope we can discuss something trading related and how it applies to ACD. I'd like to talk about how you choose to exit a position. I find that anytime I'm taking failed A trades my profit target/risk are well defined. I'll usually place the stop somewhere slightly above or below the A level and my target is the other A or I'll exit by end of day if it's a day trade position.

But when it comes to taking confirmed A's my risk/reward is very tough to define. I don't know the right place to exit a profitable trade as I don't really have a point of reference, and my stop loss tends to be a lot wider then I'd like. Does anyone run into the same problem? How are you managing your profitable confirmed A trades?

 

[ignl]

Thread has gone a bit quiet so I hope we can discuss something trading related and how it applies to ACD. I'd like to talk about how you choose to exit a position. I find that anytime I'm taking failed A trades my profit target/risk are well defined. I'll usually place the stop somewhere slightly above or below the A level and my target is the other A or I'll exit by end of day if it's a day trade position.

But when it comes to taking confirmed A's my risk/reward is very tough to define. I don't know the right place to exit a profitable trade as I don't really have a point of reference, and my stop loss tends to be a lot wider then I'd like. Does anyone run into the same problem? How are you managing your profitable confirmed A trades?

Yeah its hard question. There are no easy answers and each situation is different. I personally prefer smaller leverage and often don't have any real stop order at all and mostly use time stops. If it is close - pivot range could be your level for tighter stops.

 

[sarue]

Thread has gone a bit quiet so I hope we can discuss something trading related and how it applies to ACD. I'd like to talk about how you choose to exit a position. I find that anytime I'm taking failed A trades my profit target/risk are well defined. I'll usually place the stop somewhere slightly above or below the A level and my target is the other A or I'll exit by end of day if it's a day trade position.

But when it comes to taking confirmed A's my risk/reward is very tough to define. I don't know the right place to exit a profitable trade as I don't really have a point of reference, and my stop loss tends to be a lot wider then I'd like. Does anyone run into the same problem? How are you managing your profitable confirmed A trades?

If my A confirms I add (or subtract for a short) the value of my A to the confirmed price level to set a new target. I find that A, 2A, 3A etc works well if prices are strongly trending.

 

[redbaron1981]

Thread has gone a bit quiet so I hope we can discuss something trading related and how it applies to ACD. I'd like to talk about how you choose to exit a position. I find that anytime I'm taking failed A trades my profit target/risk are well defined. I'll usually place the stop somewhere slightly above or below the A level and my target is the other A or I'll exit by end of day if it's a day trade position.

But when it comes to taking confirmed A's my risk/reward is very tough to define. I don't know the right place to exit a profitable trade as I don't really have a point of reference, and my stop loss tends to be a lot wider then I'd like. Does anyone run into the same problem? How are you managing your profitable confirmed A trades?

There are a lot of answers to this that you can find in the thread. I know that there is some mention of using the ATR as guide. Maverick used time stops a lot. I'd have to hunt through my notes I know that he said he would trade on a confirmed A up by taking the break of a new high and use a stop just behind the confirmed A level. I can't quote him but he did say that if price breaks back down through the A level it is usually telling you something.

You can try a search on this thread for posts by Maverick74 and using the terms stop and target and you should get some good results.

Also another thing to take into account is the percentage of ATR your using as Mav said this will depend on what kind of trader you are. For example if you are a momentum trader you don't necessarily want to be using an A value that is already 50% of the ATR as the RR is not going to be so good. So you need to set this dependant on if you prefer to fade over play momentum.

One last thing is that you should exit when the reason for the trade is no longer valid so if you traded a breakout and price has failed to stay above below then maybe it's best to exit as the reason for the trade is no longer valid. I think the concept of the time stop is one of the best methods a trader could ask for.

 

[Robert Yanks]

Hello HomeGamer ACD mutual fund shape shifters,

I’ve put in a few changes that will trigger at tomorrow’s close.

Of note this week:

The Dow (DOW) turned short term negative and confirmed a monthly A Down on Tuesday at 179.14.

Emerging Markets (EEM) turned short term negative on Tuesday and confirmed a Monthly A Down last week.

Gold (GLD) continued to take a 55 gallon butt kicking. Look at Mav’s Volatility Index at 10! It’s been there for 3 days in row, and it’s had 12 straight days of negative number lines. That’s some serious negative compression. You can also see the recent November pull back so it could easily rest here a bit and then go ……

In the Growth and Value ETF’s, all but two went short term neutral and a gentle whisper will send them to ST negative. And, those weakest are monthly A down.

Regional Banks (KRE) are hanging in there with short and long term number lines. It’s also banging its head on the monthly A Up at 41.54.

Market Vectors Oil (OIH) has returned to short term negative and confirmed a monthly A Down on Tuesday.

The 500 (SPY) is near short term negative but confirmed a monthly A Down on Tuesday.

The Dollar (UUP) continues on its steroid run with a monthly A up on March 5th and strong short term number lines.

There are juicier ACD insider details at my pay for view web page:

ACDknowldegetotalystolenfromMav.com

 

[Robert Yanks]

I was curious how others score a failed A down followed by a failed A up and then a confirmed A down. I was debating -3 vs. -2 and had reasonable arguments for both. Any thoughts? Thanks

Hello trader31,

If you look at OIH on Monday, my chart is just what you described. It's a -3.

As you know, if you have a C Up or Down, and then price passes back through the OR, you have a D point and the daily number line is a zero. Not so with failed A up and downs. The last signal was an A Down (-2) and the one before a failed A Up, for a total daily of -3.

 

[redbaron1981]

Hey ACDr´s

I just thought I would let you know a couple of things that I am currently looking at to try and personalise my ACDing.

First of all with the Fx markets there has been a lot of discussion into what OR to use as FX is a 24 hour market. I have been tracking number lines across around 18 pairs using the London open as my OR for a 24 hour period. Last week whilst watching the dollar getting stronger by the day something occurred to me. As Mav states repeatedly the levels are only to determine volatility levels and that he reads price action to make actual trade decisions. One of the "tells" Mav and Fish talk of is good news bad action and I have been looking into this in the past with other methods and trying to establish a way of monitoring it. Knowing that we need to monitor the market for this action can be easily forgotten unless you have a way of recording it daily like number line analysis.

So the first thing to point out is that for example we are trading eurusd we have both morning news released in Europe followed by the US releases around US open. So really we should using as a minimum an OR that captures the volatility of these releases. What this will enable us to monitor the impact the news has on price. For example a good US release should see the dollar strengthen therefore giving us an A down on for example the eurusd. How ever its when we see a disjointing of this we can start to become aware that something maybe occurring that is not necessarily public yet. If for example when we see the USD failing to sell off on bad news then we know that traders are not only supporting price but may be increasing position size on the discounted price that a news spike can produce. By quantifying if the news should be good or bad for our pair, and then monitoring A ups and A downs we can get an idea of what is going on behind the scenes. last week we had three poor releases from the US and yet the Dollar continued to strengthen on optimism of an early rate hike.

Taking this to another level we could build a number line on medium to high impact news releases and then cross reference this to what the price number lines were saying. So another example is if we had a strengthening fundamental number line yet our normal price number lines are decreasing we are seeing price failing to react to good news which is a sign of weakness.

I have not finalised any of the details of measuring these number lines but thought I would throw it on the thread to see if anyone else is using something similar. The concept of the number lines are really powerful and can be applied in many ways to produce a considerable edge over the chart traders.

 

[eurusdzn]

I am not really an ACDer but i watch this thread for posts from the "boss".
Maverick74 spoke of using a catalyst or event or news for an opening range.
Maybe it is a way of thinking that say, within a weekly structure of Opening range, A-up
And A-down, an eventful news catalyst occurs that leads to dramatic PA which can be
isolated as an opening range itself. Nested ranges?
Having this additional info why wait for an A-up in the original weekly range.
If price was near an A-down it might take days for price to traverse a range to the A-up
where you get long. Maybe unorthodox ACD but Maverick did mention this long ago.