Bitcoin is an asset. One that does not have cash flows nor is it technically a commodity yet. If I had to classify it, I would classify it as a collectable. Much like art or a classic car. However, it will not stay this way. If it would, it would be very bullish since collectibles grow over time as a function of two things (population growth and GDP expansion). At some point, crypto will become a commodity of sort and leave the world of collectibles. When that happens it will be able to be valued as input into some process that produces some output. Based on the value of that output we can ascertain some value to what the input should be worth. This will be very bearish for crypto as it is for all commodities. But before that phase happens, its the opposite. As a collectible, it's value should rise with both adoption rates (which is an analog to population growth) and GDP growth (which is an analog of the wealth of the overall population). If you want to be a bull, now is the time while it's in this phase. Once the commodity phase starts, better hit the sell button. I think we are still a few years out before that comes to fruition.
The ACD Method
- Thread starter sbrowne126
- Start date
Bitcoin is an asset. One that does not have cash flows nor is it technically a commodity yet. If I had to classify it, I would classify it as a collectable. Much like art or a classic car. However, it will not stay this way. If it would, it would be very bullish since collectibles grow over time as a function of two things (population growth and GDP expansion). At some point, crypto will become a commodity of sort and leave the world of collectibles. When that happens it will be able to be valued as input into some process that produces some output. Based on the value of that output we can ascertain some value to what the input should be worth. This will be very bearish for crypto as it is for all commodities. But before that phase happens, its the opposite. As a collectible, it's value should rise with both adoption rates (which is an analog to population growth) and GDP growth (which is an analog of the wealth of the overall population). If you want to be a bull, now is the time while it's in this phase. Once the commodity phase starts, better hit the sell button. I think we are still a few years out before that comes to fruition.
Thanks, Mav. I'll try this going forward. Do you have a way to screen? I've been running indexes, efts and then narrowing it down to individual stocks but then this would kinda get me in a hot and crowded market.
I'd hate this thread to become discussion about bitcoin (as I'm not a fan of crypto space at all), but let me just say this: bitcoin is a mania, it will ultimately be worth zero. Now, there might be some "value" in the blockchain but not really a monetary one (similar to the internet that also has value but you can't own it and put a price on it).
And I say (about the blockchain) that it "might" have value as I'm not so sure any more. Have you ever heard about "Hashgraph"? It's a blockchain killer, kind of makes it obsolete. When I heard about it a month ago, it blew me away with its simplicity. low costs
Anyway, let's keep it focused on ACD. Funny that I just found on my laptop the materials regarding ACD, that I worked on exactly a year ago, including references to this thread. I have no idea why I even abandoned that "project". Oh well...
There's your problem. You're screening. LOL. If you are using a screener that means whatever comes up will come up on everyone else's screener too right? So back to my old stories again. So when I first started trading back in my prop firm days I show up to work and what do I do? I run the screeners of course. So I screen for volatile stocks. I screen for stocks at 52 week highs. I screen for stocks with unusual volume. I screen for stocks that made large one day moves. Never made a dime on these. Why? Because everyone was running the same screeners. We were all in the same trades. So I get myself into a group within the firm thats making money everyday and I start changing my habits. I watch what my mentor is trading. He tells me, watch XYZ today, put that on your list and watch it. XYZ eh? I pull up a chart and it looks like a dead dog. Ugly little thing. Flat chart, barely moves, not much volume. What the hell right? But I put it on my screen and start watching. Naturally I get distracted by some of my other stocks that are from my "exciting screeners" and I lose track of XYZ.
At the end of the day I go over and ask my mentor how he did today. He said he made a killing. In what I asked? He said did you watch XYZ? I said, no, I forgot all about it. I pull up a chart and the stock was up 8% in a straight line with almost zero downticks. You couldn't have drawn a straighter line if you tried. I said what the hell. Where did that come from? He explained, well ABC reported earnings today right? Well, ABC makes widgets. XYZ supplies the raw materials for those widgets. So when ABC reported great earnings, the smart money started buying up XYZ. No one was watching it because the chart was ugly as sin. He explained to me, you can't screen for stocks. You have to "anticipate" the moves. You have to develop the skill that sees things "before" other people do. He said XYZ will now show up on everyone's screener tomorrow because it was up 8% today. He said it's done. Don't touch it again. Look for the next one.
So the idea here is the "easier" money will always be made trading stuff that people are NOT talking about and obsessing over. This is one of the reasons why the ES is so hard to trade because EVERYONE is watching it. You need to find areas in the market that are not so obvious. Scanning for 52 week highs, high volume, high volatility, good fundamentals, etc, these are traps. You would be better off honestly doing the opposite. Look for stocks with low volume, low volatility and horrible fundamentals. LOL. Just keep a list of them around and wait for one of them to start breaking out. No one will be watching and you will have the trade all to yourself.
There's your problem. You're screening. LOL. If you are using a screener that means whatever comes up will come up on everyone else's screener too right? So back to my old stories again. So when I first started trading back in my prop firm days I show up to work and what do I do? I run the screeners of course. So I screen for volatile stocks. I screen for stocks at 52 week highs. I screen for stocks with unusual volume. I screen for stocks that made large one day moves. Never made a dime on these. Why? Because everyone was running the same screeners. We were all in the same trades. So I get myself into a group within the firm thats making money everyday and I start changing my habits. I watch what my mentor is trading. He tells me, watch XYZ today, put that on your list and watch it. XYZ eh? I pull up a chart and it looks like a dead dog. Ugly little thing. Flat chart, barely moves, not much volume. What the hell right? But I put it on my screen and start watching. Naturally I get distracted by some of my other stocks that are from my "exciting screeners" and I lose track of XYZ.
At the end of the day I go over and ask my mentor how he did today. He said he made a killing. In what I asked? He said did you watch XYZ? I said, no, I forgot all about it. I pull up a chart and the stock was up 8% in a straight line with almost zero downticks. You couldn't have drawn a straighter line if you tried. I said what the hell. Where did that come from? He explained, well ABC reported earnings today right? Well, ABC makes widgets. XYZ supplies the raw materials for those widgets. So when ABC reported great earnings, the smart money started buying up XYZ. No one was watching it because the chart was ugly as sin. He explained to me, you can't screen for stocks. You have to "anticipate" the moves. You have to develop the skill that sees things "before" other people do. He said XYZ will now show up on everyone's screener tomorrow because it was up 8% today. He said it's done. Don't touch it again. Look for the next one.
So the idea here is the "easier" money will always be made trading stuff that people are NOT talking about and obsessing over. This is one of the reasons why the ES is so hard to trade because EVERYONE is watching it. You need to find areas in the market that are not so obvious. Scanning for 52 week highs, high volume, high volatility, good fundamentals, etc, these are traps. You would be better off honestly doing the opposite. Look for stocks with low volume, low volatility and horrible fundamentals. LOL. Just keep a list of them around and wait for one of them to start breaking out. No one will be watching and you will have the trade all to yourself.
Thanks, Mav. I also know that ACD isn't going to make anyone a profitable trader if they're already not one. I mean it seems to help you narrow and focus on your trades better I suppose.
Here is something that I am looking at in real time....REGN. This stock has been a dog since it last confirmed around Sept last year. It's on my radar right now. It just moved through the March A-up with a retracement back to the A level. The move above the A up was not a strong confident blast up move though. Also, the stock has been on a downtrend since forever. Chart looks ugly as hell. I'm thinking of a long position here.
Any comment on this one?
There's your problem. You're screening. LOL. If you are using a screener that means whatever comes up will come up on everyone else's screener too right? So back to my old stories again. So when I first started trading back in my prop firm days I show up to work and what do I do? I run the screeners of course. So I screen for volatile stocks. I screen for stocks at 52 week highs. I screen for stocks with unusual volume. I screen for stocks that made large one day moves. Never made a dime on these. Why? Because everyone was running the same screeners. We were all in the same trades. So I get myself into a group within the firm thats making money everyday and I start changing my habits. I watch what my mentor is trading. He tells me, watch XYZ today, put that on your list and watch it. XYZ eh? I pull up a chart and it looks like a dead dog. Ugly little thing. Flat chart, barely moves, not much volume. What the hell right? But I put it on my screen and start watching. Naturally I get distracted by some of my other stocks that are from my "exciting screeners" and I lose track of XYZ.
At the end of the day I go over and ask my mentor how he did today. He said he made a killing. In what I asked? He said did you watch XYZ? I said, no, I forgot all about it. I pull up a chart and the stock was up 8% in a straight line with almost zero downticks. You couldn't have drawn a straighter line if you tried. I said what the hell. Where did that come from? He explained, well ABC reported earnings today right? Well, ABC makes widgets. XYZ supplies the raw materials for those widgets. So when ABC reported great earnings, the smart money started buying up XYZ. No one was watching it because the chart was ugly as sin. He explained to me, you can't screen for stocks. You have to "anticipate" the moves. You have to develop the skill that sees things "before" other people do. He said XYZ will now show up on everyone's screener tomorrow because it was up 8% today. He said it's done. Don't touch it again. Look for the next one.
So the idea here is the "easier" money will always be made trading stuff that people are NOT talking about and obsessing over. This is one of the reasons why the ES is so hard to trade because EVERYONE is watching it. You need to find areas in the market that are not so obvious. Scanning for 52 week highs, high volume, high volatility, good fundamentals, etc, these are traps. You would be better off honestly doing the opposite. Look for stocks with low volume, low volatility and horrible fundamentals. LOL. Just keep a list of them around and wait for one of them to start breaking out. No one will be watching and you will have the trade all to yourself.
That's one of the things I've heard you say before, and I think it might be the most important lesson in this thread. I think it's less impossible in stocks to find the low noise high signal asset, but what about FX and Commodities. With only 100 or so thing to watch, I assume everyone is watching everything. Is this where the NLs come into play? A fresh signal no one has access to but you?
Yes, it's MUCH harder in commodities and FX which is probably why they are MUCH harder to trade in general. The only defense you have in this area is being able to focus on the big picture and optimize position sizing. If you think you are going to trade crude oil with a .30 stop off some precise level you are absolutely nuts. This is why in my honest and humble opinion you MUST make some attempt to understand the fundamentals and the longer term picture. Saying it's "all in the charts" will get you killed in commodities and FX. You need to take a step back, widen your stops (a lot), use technicals and fundametals, and understand volatility as it relates to position sizing.
FX does offer some comfort in that there are probably 70 or 80 pairs to choose from so you can get into some of the more less crowded areas. With commodities obviously you can get into the endless amount of spread trades. So while WTI is one market in the flat price world, there are probably 40 or 50 tradeable spreads in WTI. By going into spreads you widen your reach and you can be more of a surgeon and use a scalpel vs a wrecking ball trying to trade flat price.
This and the riding coattails discussion earlier brings up another issue I have been curious about.
At what level does order execution have to change from the way a retail trader can do it... instantaneous all-in and all-out?
Retail guys are always told we have a big advantage in being small and nimble, and can trade circles around the big boys. But from stories I have heard guys at banks and HF's will jump in and out of the market all the time, which sounds pretty nimble to me.
My two cents...great execution is nice, but if you are not getting the bigger picture correct on your trade you are just re arranging deck chairs on the Titanic.
I'm assuming that you know about his RV TV, right?