I would like to commence a discussion thread on the above. I have been trading ACD on cable for the last three months. There are many nuances of this method, and it will be helpful for any practitioners to discus these nuances. Look forward to some input. Regards Handle
For anybody new to ACD, it is a method of trading practiced by Mark Fisher. His book The Logical Trader is where you will find details of the method. There is also a good write up here: http://www.investopedia.com/articles/technical/04/032404.asp
As an example, today The daily pivot is 1.9225 - 1.9223, whilst the opening range is below the pivot viz 1.9223 - 1.9188 Thsi sets up a beraish tone to the day, and whilst the market remains under the opening range one would look to sell the market. In addition, the A down is at 1.9160 and the A up is at 1.9251 which is where one would look to get short or long respectively.
I have been looking at trading longer term pivot ranges with cable, and they can be quite profitable. I have noticed though that when the market starts to reverse through a pivot range, there is the possibility of several whipsaws. For example, today cable broke through the bottom of the 14 day pivot range. This had been bullish since 14 February. Rather than go short at this juncture, ACD suggest that we wait for an A down. Tomorrow an A down will set up a bearish medium term trade. A more aggressive trader could short on a break of the pivot range by (say) 10 pips and would have set up a short today at 1.9158 with a stop at 1.9205 for a risk of 47 pips (all excluding spread). Lets see how that plays out tomorrow.
Another pivot "play" is to use the 3 day pivot range and trade breaks of that. This is different from the 14 day trade in that an overnighter is not recommended with the 3 day pivot range. It also means that there won't be a trade every day. A break of the 3 day range can have quite a few whipsaws and so is advisable to try and risk to a smaller stop loss than the 14 day pivot. Today (14 march 2005) the 3 day pivot at 1.9228 was broken in the opening range. One could have gone short at that point, or waited for the opening range to be complete and trade a break of that, at 19188. The maximum move was to 1.9100. A nice move (for a Monday)
Todays opening sees the market below the daily,3 day and 14 day pivot ranges. For the longer term trader who got in at the break of the 14 day pivot range yesterday, stops should be moved to just above 1.9168 for a risk of just over 10 pips. The less aggressive trader would wait for an A down today at 1.9082 before going short. The three day pivot range is 1.9201 - 1.9156 and so any daily longs should wait before that is crossed. Thats how I see todays set up. Todays daily pivot is 1.9161 - 1.9142 and should be watched for evidence of any short term reversal. Any other ACD traders out there? I would appeciate any input. Regards
Well..... Cable took out the daily, 14 day and 3 day pivots in a very strong upmove. There were three entry points 1.9161 (top of daily pivot) 1.9168 (top of 14 day pivot) and 1.9201 (top of 3 day pivot) For a longer term position, the 14 day pivot short was stopped out at 1.9168, and a "clean" long entry was at the A up at 1.9171 with a stop just below 1.9145.
Hi Handle, Please keep your thread alive - because I want to do things in proper order, I will read your moneytec thread before asking questions here - I have questions!
I have noticed in the past that when the trend of the marke tbegins to change, the 14 day pivot range is whipped a few times until the market makes up its mind about direction. Today is a case in point. The market has now traded down through the pivot, and one should look to be short.
Hi vince Please bear in mind that I am not trading "pure" ACD as per the book, but am in an evolutionary stage of adapting it to suit my personality. I will be happy to answer any questions if I can. Regards