The ACD Method

ignl said:
Yeah that short 3rd derivative comment caught my attention too probably because Maverick discussed it here not that long ago. However it is difficult to say what Fisher meant as he didn't say of what that 3rd derivative was. Price? Or maybe numberlines like Maverick? Rate of change of acceleration... I need to meditate a bit to try to grasp what does it mean :)
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i know they are trading power and weather derivatives, but it's not ACD based. perhaps that is what he meant. their trading operation is not a sophisticated as you are probably thinking
 
running_bare said:
Obviously he is talking about convexity eg options or instruments with optionality
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No. What he means by derivative is the idea of capturing a change before another change takes place. Think of it kind of like front running. The word derivative is a measure of change, it is mathematically represented as a slope. The slope measures the change in Y for a given change in X in relation to X. Since most of you are familiar with options take gamma for example. Gamma is the first derivative of delta. So gamma tells us how much the delta will change given gamma. So by analyzing the gamma, you can tell ahead of time how much the delta will change. The purpose of derivatives is capturing the 2nd and third order effects before the first order effect. So when Fisher is talking about 3rd derivatives he is saying you need to be faster. You can't wait for price. You have to capture the value earlier and earlier. I caught onto this very early on in my ACD development. Almost all my ACD is now based on derivatives and not absolute values.
 
hoop121 said:
i know they are trading power and weather derivatives, but it's not ACD based. perhaps that is what he meant. their trading operation is not a sophisticated as you are probably thinking
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Yeah I concur with this. I think Fisher knows the right things to say on TV but he definitely is not that this sophisticated.
 
kinggyppo said:
So probably the biggest takeway for me was that Fisher said he was shocked by the breakthru in technology. I am reading Shale' Boom and Bust by Dan Dicker. He was in the same camp, a long term bull on oil. In the book he talks about how a lot of the big players have left the physical space. He also believes that the US shale plays won't last.

re Fisher he says you can make money far out on the curve, but as Mav says you may see a


notes
-collect, analyze, decide, implement

Pretty much what I've been preaching here the last 1000 pages or so.

-pattern recognition

Vague


-recommends swing trading/longer term horizon

Yup, stay away from the chop.


-trading 3rd derivative (jerk/rate of change of acceleration) Mav???

Trade the change of the change of the price

-disintermediation-reduction in the use of intermediaries between producers and consumers

More efficient logistics.

-Fisher shocked by selloff due to technology/fracking

He shouldn't have been.

-bus traders trading front month

Yeah I guess.

-$$$ on 24, 36 month curve

Better investment potential out there but not now, I think the contango is too wide.

-side note Dan Dickers book on Shale talks about banks leaving physical space

This happened awhile ago.

-markets far out on the curve under valued

I think the curve is a little rich at the moment but generally speaking long term there is more value there.

-tech over Dodd Frank re oil mkts/horizontal drilling

Not sure what he is alluding to here.

-looking for more pain in 2015/2016 needs more panic, bankruptcy

Agree


-oil plays tech heavy? shale? look at midcap stocks not Exxon

No opinion here.

-buy front month spread close to expiration??? Mav

Yes, curve is too steep.

-China was a crash, US looks good relatively speaking

Whatever....

-stronger dollar
-likes biotech

He always likes biotech because it's not that correlated to the S&P.

-Saudis not swing producer like before

Very old news

so Mav need clarification of 3rd derivative, discussion of oil curve, and buying expiring front month spreads, not thinking the last one is for a novice.
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kinggyppo said:
thanks Mav, I am sure we could benefit from discussion of the curve in oil I feel pretty clueless about it. It doesn't look linear to me.
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That's because it's "not" linear. Good eye King. In the land of the blind, the one eyed man is King! :)
 
kinggyppo said:
So probably the biggest takeway for me was that Fisher said he was shocked by the breakthru in technology. I am reading Shale' Boom and Bust by Dan Dicker. He was in the same camp, a long term bull on oil. In the book he talks about how a lot of the big players have left the physical space. He also believes that the US shale plays won't last.

re Fisher he says you can make money far out on the curve, but as Mav says you may see a


notes
-collect, analyze, decide, implement
-pattern recognition
-recommends swing trading/longer term horizon
-trading 3rd derivative (jerk/rate of change of acceleration) Mav???
-disintermediation-reduction in the use of intermediaries between producers and consumers
-Fisher shocked by selloff due to technology/fracking
-bus traders trading front month
-$$$ on 24, 36 month curve
-side note Dan Dickers book on Shale talks about banks leaving physical space
-markets far out on the curve under valued
-tech over Dodd Frank re oil mkts/horizontal drilling
-looking for more pain in 2015/2016 needs more panic, bankruptcy
-oil plays tech heavy? shale? look at midcap stocks not Exxon
-buy front month spread close to expiration??? Mav

-China was a crash, US looks good relatively speaking
-stronger dollar
-likes biotech
-Saudis not swing producer like before
-raise in rates bullish for commodities/physical vs paper
-likes biotech and brokers, small/regional banks

so Mav need clarification of 3rd derivative, discussion of oil curve, and buying expiring front month spreads, not thinking the last one is for a novice.
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Thanks King

The Collect, Analyze, Decide and Implement became my partner and CADI for making decisions a long time back.
 
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