The ACD Method

Maverick74 said:
I'm long SQ as a long term play.
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Mav, I'm sorry but that is not a helpful response.

I've been looking at ACD from an intraday trading perspective on stocks. I've provided a few examples but it looks like no one trades stocks intraday in this thread. That's a shame because from I see that ACD can be applied to stocks intraday as well. I've seen around 20-30 examples over the last few days. The first time I read The Logical Trader I dismissed it but after re-reading it and watching the seminar on YouTube twice, I've come to better understand it. As you have mentioned earlier in this thread, it is not a system but should be used along with other things. A lot of what Fisher says actually overlaps with Dalton but the Fisher approach is more KISS. Using ACD to filter for daily bias and opportunities does keep you from overtrading, making mistakes and best of all taking the best opportunities. Anyway good luck to you and if you would like to share an insight on ACD and stocks it would be much appreciated.
 
Mav, a while back you said "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."

I agree that looking at the stocks that everyone else is looking at on a particular day (eg. earnings release) is not a good idea but Fisher does say to trade stuff that moves. So you do need a stock with some range and movement. Don't you agree?
 
Snowman75 said:
Mav, a while back you said "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."

I agree that looking at the stocks that everyone else is looking at on a particular day (eg. earnings release) is not a good idea but Fisher does say to trade stuff that moves. So you do need a stock with some range and movement. Don't you agree?
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There is a trick to this. The goal is to "find" the volatile stocks "before" they become volatile. Once a stock becomes volatile, it signals all the gamblers to run in and over trade it, hence the noise. You need to find a way to anticipate this before everyone else. Not saying it's easy, but that's where the big bucks are. Hint: ACD can help you do this! :)
 
Fisher would say narrow 3 day pivot would signal a near term large range move. You can also simply look at bollinger bands or a number of other technical indicators.

I would argue though, the more "current" volatility the easier an instrument is to trade. When volatility kicks up, technicals become easier to read in my opinion. Less Volatility, more noise. Just an opinion, but when volatility kicks up, money pours into my account (I'm not an option seller either)
 
Fisher says you need stuff that moves. Not 'going to move'. So while excessive attracts gamblers to run in and over trade it (as you say Mav), I would think that some volatility (as per Palindrome) makes it easier to trade and isn't that what we want. With thousands of stocks there has to be 10-20 sweet stocks to trade. And if you have 20 stocks then you pick 2-3 during the day to actually pull the trigger.
 
Maverick74 said:
There is a trick to this. The goal is to "find" the volatile stocks "before" they become volatile. Once a stock becomes volatile, it signals all the gamblers to run in and over trade it, hence the noise. You need to find a way to anticipate this before everyone else. Not saying it's easy, but that's where the big bucks are. Hint: ACD can help you do this! :)
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Could you give an example? Without actually revealing the exact strategy.
Does it include volume analysis?

I have yet to find a way on how to spot volatility before it happens.
 
carrer said:
Could you give an example? Without actually revealing the exact strategy.
Does it include volume analysis?

I have yet to find a way on how to spot volatility before it happens.
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Sure, this is what I did a long time ago when I traded stocks actively intra-day. At the prop firm where I use to trade we use to focus on listed stocks and specifically mid cap stocks. Say MGM was due to report earnings today. That stock was going to be messy. One of my favorite stocks at the time was IGT. They made the slot machines that went into casinos. Nobody was watching IGT, they were watching MGM. MGM would report a strong EPS report and IGT would fly. Let's say on an AVG day IGT had a 1.50 range. Today it would move 5 pts in a straight line on the back of MGM's numbers. It was easy money and nobody was in it. We did this everyday. We look at any stock that either had earnings, earnings revisions, or any event that materially affected their earnings (not up/downgrades) and then looked for names that would be impacted by that news, not the main stock, maybe it's suppliers, it's customers, it's competitors, etc.

It took me a long time to learn this. When I joined the firm and before I was in a group I would simply scan the market for the most volatile stocks and day after day I would get killed. Once I joined my group my mentor showed me the value of hard work. Anyone idiot can scan for volatile stocks, even back in 2000 all it took was 10 seconds. The hard part was doing your research and looking for the more nuanced names. Once I found these names they were so much easier to trade. Very little noise, lot's of movement and very easy to read the tape.

The stuff that everyone trades is messy. Oh sure they move all right, all over the f*cking place. How does that make them tradeable unless you think you can extract alpha from a random noise process. So is this easy? Good Lord no. If it was everyone would do it. Most the guys were lazy and ran simple scans in a minute or two and jumped right in. Buying..selling...selling...buying, getting stopped out over and over. Breaking their monitors, throwing them across the room. Yeah, those were the good old days. In my trading room you could hear a pin drop. It was very quiet, we were very focused.
 
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