The ACD Method

Maverick74 said:
Bass's Hayman Capital Up +24.8% in 2016, Warns of 'Tectonic Shift' in Global Markets
Jan 4 2017 | 8:52pm ET

Kyle Bass’s Hayman Capital reversed first-half losses in its flagship fund to end last year with a gain of 24.83% due to prescient calls on currencies and bond market developments.

The return compares with a roughly 9.5% gain for the S&P 500 in 2016.

Bass reportedly shorted currencies including the yen, euro and yuan while also selling the sovereign bonds of the U.S., Japan and several European nations, according to an investor letter. His timing was good; global bond prices plummeted in the final two months of last year, while the U.S. dollar has soared.

Bass’s fund was down approximately 10% at the end of 2016’s second quarter, according toTheWall Street Journal, and his AUM had fallen from $2.3 billion in 2014 to around $770 million in June 2016.

In the investor letter, Bass also warned of more volatility ahead, saying global markets are at the start of a “tectonic shift” from deflationary expectations to inflationary ones. Complicating matters is the tremendous leverage in place across global economies, which was workable as long as interest rates were low but could become problematic as they rise.

“As we enter 2017, we believe enormous macro imbalances are just beginning to unwind,” Bass writes in the letter, which was first seen byYahoo Finance. “We hold a nuanced view…that contemplates higher global inflation, tepid real economic growth and severe imbalances in select Asian financial systems and currency markets.”

“The enormity of the apparent disequilibrium is breathtaking, making today a tremendous time to invest,” Bass added.

Bass’s Hayman China Opportunities Fund, which launched in July, has reportedly gained nearly 6% since inception as the Chinese currency has weakened. Bass has been bearish on the Chinese banking system for some time, writing in February 2016 that the sector was “the world’s largest macro imbalance.”

Bass founded Hayman in 2005 after stints at Bear Stearns and Legg Mason. He rose to prominence for correctly predicting the 2008 subprime crisis, and his macro fund has returned 436.75% since inception (16.7% annualized), according toWall Street Journaldata. In addition to his macro plays, Bass has gained notoriety since 2015 for a “short activist” effort challenging the patents on range of blockbuster drugs owned by various healthcare and biotech companies.
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Does anyone know what these opportunities are that Bass is talking about?
 
I told my father about the ACD method and told him to watch Mark Fisher's seminar on Youtube.

He's a programmer and he came up with a very simple program based on ACD that works surprisingly well, based on backtesting and so far a short limited live testing period. it's just based on buying A-Ups and selling A-downs, using the hedge in between as the maximum loss.

Different ORs work better for different currency pairs. This program seems to work better for the majors than the crosses.
 
Apollonius said:
What's up everyone? Still learning to use ACD better here.

In Mark's video with CQG demonstrating his Fisher bars, he actually seems to use the 3-day pivot range for intra-day trading now rather than the previous day pivot. I have been using the previous day one but after someone helped me code a pivot range indicator with variable time periods yesterday I tried out the 3-day and it seems it is often much stronger than the 1-day one.

I still trade currencies, I fade failed A-levels by setting a trailing stop once it goes into a slight profit -- it kinda works but maybe there is a better way to do it since noise often takes me out.
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The one idea from Fisher that I was able to use right away is Time. In the major currencies, there's lots of smart Traders, lots of eyeballs watching those screens. When a move is happening, everyone usually knows about it, the best Traders know what the market should be doing given the circumstances. So if a currency makes a move and stalls, your usually better off just getting out or cutting. It's the Bus People concept. There's lots of overlap and even in a trending market like the Euro you get lots of retracements, some violent. You just don't want to hang around a bad neighborhood.
 
Cswim63 said:
The one idea from Fisher that I was able to use right away is Time. In the major currencies, there's lots of smart Traders, lots of eyeballs watching those screens. When a move is happening, everyone usually knows about it, the best Traders know what the market should be doing given the circumstances. So if a currency makes a move and stalls, your usually better off just getting out or cutting. It's the Bus People concept. There's lots of overlap and even in a trending market like the Euro you get lots of retracements, some violent. You just don't want to hang around a bad neighborhood.
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Yup. "Stalls" is the operative word.

Good moves don't.
 
I guess another way to say that would be that I don't think trailing stops are a good idea in currencies. There's just too much noise. You need to see momentum. When the momentum stops, you're usually better off just taking what the market has given you and then give it some time to make up its mind. Yes you will give up the occasional continuation. But it will very often come back and retest that very price. It might be three days later, but by then few will remember. I'm looking for pressure, for Traders getting run over. Without that there is no edge.
 
Cswim63 said:
I guess another way to say that would be that I don't think trailing stops are a good idea in currencies. There's just too much noise. You need to see momentum. When the momentum stops, you're usually better off just taking what the market has given you and then give it some time to make up its mind. Yes you will give up the occasional continuation. But it will very often come back and retest that very price. It might be three days later, but by then few will remember. I'm looking for pressure, for Traders getting run over. Without that there is no edge.
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Happy New Year, Swim !
Haven't seen you for ages so welcome back :)
 
Just checked out USD index thread. Need to resurrect that thang. Like they say, if you want something done right, gotta do it yourself. Haha. I really enjoy this thread. When I start thinking I know something about the markets, I come here and read. Brings humility. Which really has never been my problem, somehow. Good to see you too, Victory.
 
Cswim63 said:
Just checked out USD index thread. Need to resurrect that thang. Like they say, if you want something done right, gotta do it yourself. Haha. I really enjoy this thread. When I start thinking I know something about the markets, I come here and read. Brings humility. Which really has never been my problem, somehow. Good to see you too, Victory.
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Yes, I do like that thread although Pip has not been active lately. Are you going to trade around inauguration? I will. Looking at the data in 2009 when there was Obama's inauguration, there was a good opportunity to make money. I think there will be another like that around Trump's inauguration.
 
Generally my instinct says stay away or treat it like a news release. The markets seem to have a Trump premium to them now. So it may be similar to "Buy on the rumor, sell on the news." Unless they sell off first, before the inauguration. It's just another day, and it's sort of old news, and it's not directly economic, but political. So I'm a little weary, but I welcome other opinions.
 
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