The ACD Method

[baggerlord]

There are as many ways to use ACD as there are traders. All methods "work" under the correct market conditions. The key is to know what market condition you need and use ACD to identify those markets. At least that is my opinion.

I personally am a fan of Al Brooks material. Not all of it but I have taken a few things from it that I use for my entries and exits. In the past I have used MAs with ACD to good effect. I got rid of them a while ago because I found I was taking the same signals regardless of where the MA was. I use market profile but mostly for gold because I think it works well for that market. I'm getting away from it though as I look to trade more products. The more sophisticated my ACD stuff gets, the less I feel the need to use anything else but some very simple bar analysis for entries and exits.

And here is some ACD porn.

 

[justrading]

There are as many ways to use ACD as there are traders. All methods "work" under the correct market conditions. The key is to know what market condition you need and use ACD to identify those markets. At least that is my opinion.

I personally am a fan of Al Brooks material. Not all of it but I have taken a few things from it that I use for my entries and exits. In the past I have used MAs with ACD to good effect. I got rid of them a while ago because I found I was taking the same signals regardless of where the MA was. I use market profile but mostly for gold because I think it works well for that market. I'm getting away from it though as I look to trade more products. The more sophisticated my ACD stuff gets, the less I feel the need to use anything else but some very simple bar analysis for entries and exits.

And here is some ACD porn.

If I may use a very poor analogy.

The basic number lines tell you that you need to go to the supermarket.

The NL derivatives tell you that you need to go to the supermarket today.

The entry signal you choose to use, for me it is a well refined indicator, tells you at what time you should go to the supermarket.

 

[sparkyunited]

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.

Thanks. Nice analogy too (you have a gift for such things, Mav). I live in LA so traffic, I get it.

So I understand utilizing techniques to avoid the obvious traps both the bulls and bears set...my skeptical nature already knows to look for such traps anyway. ACD should further enhance this to help me get to the same "ballpark" but avoid some of the traffic and parking issues.

As someone who swing trades momentum small/micro caps there can be some fairly significant traffic on every pullback, I see the noise issues. I see it as a byproduct of being in markets that are moving. I think my confusion was that I think folks were suggesting going to an entirely different ballgame just to avoid shitty traffic .

 

[Maverick74]

Thanks. Nice analogy too (you have a gift for such things, Mav). I live in LA so traffic, I get it.

So I understand utilizing techniques to avoid the obvious traps both the bulls and bears set...my skeptical nature already knows to look for such traps anyway. ACD should further enhance this to help me get to the same "ballpark" but avoid some of the traffic and parking issues.

As someone who swing trades momentum small/micro caps there can be some fairly significant traffic on every pullback, I see the noise issues. I see it as a byproduct of being in markets that are moving. I think my confusion was that I think folks were suggesting going to an entirely different ballgame just to avoid shitty traffic .

Well...to use that analogy of going to a separate ballgame I would think that is analogous to choosing a different stock. For example, if you are bullish on AAPL, why not buy skyworks solutions, their biggest supplier. A stock no one talks about. If I'm going to trade equities, which I hate, pick stuff nobody is watching.

 

[sparkyunited]

Well...to use that analogy of going to a separate ballgame I would think that is analogous to choosing a different stock. For example, if you are bullish on AAPL, why not buy skyworks solutions, their biggest supplier. A stock no one talks about. If I'm going to trade equities, which I hate, pick stuff nobody is watching.

Makes sense and something I try to consider where possible in my stock selection...and made some nice coin on Skyworks fairly recently

 

[sparkyunited]

If I may use a very poor analogy.

The basic number lines tell you that you need to go to the supermarket.

The NL derivatives tell you that you need to go to the supermarket today.

The entry signal you choose to use, for me it is a well refined indicator, tells you at what time you should go to the supermarket.

That analogy works for me...

 

[baggerlord]

So anybody else watching oil for a short this week?

 

[Maverick74]

So anybody else watching oil for a short this week?

Why?

 

[Maverick74]

My 30 NL in WTI was negatively confirmed but has now reset and is neutral. It looks like it's going to be range bound for awhile. Gasoline is on fire however. The front end of the curve has been unstoppable.

 

[baggerlord]

Why?

My 30 NL is very negative and my short term NL is starting to lose momentum at an extreme. If I get price weakness I expect to see at least a couple day sell-off.