The ACD Method

[Maverick74]

So...what a week it has been. Last Friday I remembered that digging into ACD was on my to-do list having previously glanced at this thread while browsing the TA forum. Having recently read the Logical Trader, I spent the last week reading all 13000+ posts of this thread and watched 6+ hours of MF's seminar videos on YouTube (it's been a slow week at work, so....). It's been a deep dive to say the least but a very rewarding one. I'd go so far to say, epiphanic from a trading perspective.

I'm essentially a stock/ETF swing trader and my trading biases were largely already derived from my personal observations regarding the significance of monthly and daily opening ranges. Adopting the methods and principles of ACD will likely fit with how I already view markets. Removing some of my other trading crutches is proving tricky so far (I am a bit of an indicator junkie), but I am a strong believer in simple concepts being the most robust and have already seen early signs that my trading psychology is benefiting from ACD.

My thanks to Mav and many others for what they have shared here. It is truly an "island of reality in the a sea of diarrhea" compared to most ET threads. The generosity to impart wisdom and help those willing to put in the work sits very well with my personal values in a world where many folks just want to be spoon fed. There is a veritable treasure trove of resources within this thread for those willing to invest the time and effort. This has been a very rewarding week for me in that regard.

On that note, I need to think about something other than ACD for a couple of hours

I'm very impressed. It took me 8 years to write all that stuff and you read it all in a week.

 

[Maverick74]

So...what a week it has been. Last Friday I remembered that digging into ACD was on my to-do list having previously glanced at this thread while browsing the TA forum. Having recently read the Logical Trader, I spent the last week reading all 13000+ posts of this thread and watched 6+ hours of MF's seminar videos on YouTube (it's been a slow week at work, so....). It's been a deep dive to say the least but a very rewarding one. I'd go so far to say, epiphanic from a trading perspective.

I'm essentially a stock/ETF swing trader and my trading biases were largely already derived from my personal observations regarding the significance of monthly and daily opening ranges. Adopting the methods and principles of ACD will likely fit with how I already view markets. Removing some of my other trading crutches is proving tricky so far (I am a bit of an indicator junkie), but I am a strong believer in simple concepts being the most robust and have already seen early signs that my trading psychology is benefiting from ACD.

My thanks to Mav and many others for what they have shared here. It is truly an "island of reality in the a sea of diarrhea" compared to most ET threads. The generosity to impart wisdom and help those willing to put in the work sits very well with my personal values in a world where many folks just want to be spoon fed. There is a veritable treasure trove of resources within this thread for those willing to invest the time and effort. This has been a very rewarding week for me in that regard.

On that note, I need to think about something other than ACD for a couple of hours

Sparky, since you read this entire thread in one week while at work, can I ask what it is you do at work? LOL. I just want to make sure you are not an air traffic controller.

 

[justrading]

Sparky, since you read this entire thread in one week while at work, can I ask what it is you do at work? LOL. I just want to make sure you are not an air traffic controller.

Small airport, 2 or 3 flights a day, wait till the pilot calls in on the ATC handover. Might work.

 

[sparkyunited]

Sparky, since you read this entire thread in one week while at work, can I ask what it is you do at work? LOL. I just want to make sure you are not an air traffic controller.

LOL. Not quite. I actually work for a major sports league. Middle-management in a analytical capacity. We are currently in our off-season, hence it's quiet (that should narrow the options down). I will add a lot of the reading was done while off-duty, but I did have the MF 2003 seminars running while working as well.

 

[sparkyunited]

So reading through this thread, I did notice some sentiment regarding "avoiding the herd" and avoiding crowded trades, not using traditional TA methods, following Fibs, major Moving Averages, etc. I don't think I got a clear understanding of why though, if you are using specific setups that are statistically (reasonably) successful (e.g. pullbacks to 50 day MA's, momentum/relative strength plays, etc).

I certainly understand being contrarian (just ask my wife) and avoiding herd mentality. I'm currently utilizing ACD as a filter, but it's not clear in my mind yet why some aspects of traditional TA or common approaches should be avoided if they work. I would love for someone to convince me that there is little value in my other trading biases so I can simplify my approach.

 

[justrading]

ACD speaks to a directional bias, especially the number lines.

Entries are an entirely different matter. A confirmation is not an entry signal.

For entries, use what works for you. We haven't discussed entries on this thread, or exits, for the simple reason ACD is nothing about either.

 

[sparkyunited]

ACD speaks to a directional bias, especially the number lines.

Entries are an entirely different matter. A confirmation is not an entry signal.

For entries, use what works for you. We haven't discussed entries on this thread, or exits, for the simple reason ACD is nothing about either.

I understand utilizing ACD to form a directional bias and not using it as a red light/green light trading system, but there has been some sentiment expressed in this thread and by MF advising against using other common methods of TA under the guise of "avoid what everyone else is doing". It's not clear to me why, if it works.

 

[Maverick74]

I understand utilizing ACD to form a directional bias and not using it as a red light/green light trading system, but there has been some sentiment expressed in this thread and by MF advising against using other common methods of TA under the guise of "avoid what everyone else is doing". It's not clear to me why, if it works.

Here is the analogy I often use. Say you were going to travel into the city on Monday for opening day baseball game. You live 30 miles away. We learned in school the shortest distance between two points is a straight line. However, you now have to account for opening day baseball traffic. Going the "usual" way is going to have the most traffic. So you might want to try the backroads. Maybe you know a nice parking area off the beaten track that will not only allow you to avoid traffic but save $30 on parking.

The problem with common TA is traffic. Sure we all see stock XYZ going higher because it's in a nice uptrend. And we all see the shallow pullback some to generic moving avg. That's the problem, we all see that. Where you do think the stops are going to be? At the moving avg of course. So what do you think is going to happen? You and the entire herd are going to buy XYZ on the pullback, put your stops at the same level then a few days later the stock will spike down temporarily, take out the stops and move higher. This will happen over and over again. Stops provide liquidity. That is their purpose in the market ecosystem. Why deal with all that noise. Why sit in a bumper to bumper traffic to get to the ball game and pay $30 for the same lot everyone else wants to park in.

This is why we look for the uncrowded trades. We look for the less obvious entries. So you can capture the move with the least amount of variance. After all, THAT is the essence of trading.

 

[justrading]

I understand utilizing ACD to form a directional bias and not using it as a red light/green light trading system, but there has been some sentiment expressed in this thread and by MF advising against using other common methods of TA under the guise of "avoid what everyone else is doing". It's not clear to me why, if it works.

I have a very simple view of this, and I've posted to that effect before.

People who tell you don't do something but can't tell you what to do should be told to piss off, and I'm being polite here.

ACD gives a directional bias. Nobody on here has spoken to entry or exit signals.

I have spent 6 months working on refining an indicator that gives me entry signals. It actually signals entries before the definition of HH and HL (and LH LL) that the PA boys speak of. I was inspired to put in that effort by a posting of the late Jack Hershey, someone pretty much everyone here dismissed as senile. I however believe I have somethings to learn from everyone, especially the newbie who asks the question I never thought of because I thought I knew all about it.

If anyone discourages you from pursuing whatever you choose as your entry signal, ask them to provide proof of something better. Put up or shut up, we haven't covered entries and exits on this thread in a definitive fashion. I am discounting failed levels as entries, that is too one dimensional an approach when so much else is happening.

 

[justrading]

For the Johnny-Come-Latelies to my post, and Mavs, we didn't direct our posts at each other, they crossed each other.

Mav has his view, which I respect, I have my view on the subject, which I have expressed.