Handle. any suggestions on how to avoid false breakouts of ACD in stocks. for every 1 ACD breakout on A up ,there are usually 3-5 that go above it and swing back down to chop city. Appreciate your comments.
I think you already have the percentages for a winning system If it really is 5:1 - fade all the A's with a reasonable stop. I have a similar problem to you, and have started adapting so that the A points are just reference points rather than entries. The macro ACD is useful though. Currencies in December last year were fantasic ACD trades because the 14 /30/50 day pivot moving averages were all pointing up. When they are mixed as they are now in currencies (I'm afraid I don't follow stocks so don't know what is happening there) a fade is a better bet than a continuation move. Hope that helps. Regards
The 14 day pivot range is being whipped to death! Taken out again to the upside this morning. A scalping strategy using the 14 day pivot would be quite profitable. But obviously this could only work in these sort of conditions, which one cannot forsee! So money management is paramount here. Posssibly using multiple lots to take profit and cover the cost of the stop in anticipation of a bigger move. For example - yesterday the 14 day pivot was taken out at 1.9168, and the market moved as high as 1.9254 = +86pips (all excluding spread). With an initial 50 pip stop perhaps take one lot off for a 50 pip profit and leave the original stop in anticipation of a big move. Just thinking aloud here. Any ideas out there?
Should probably not trade countertrend. The market is currently above both the 30 and 50 day pivots. So only long trades, which would eliminate two of the losing trades. Once a profit of 50 pips is recorded (i.e. market moves 50 pips in your favour) move stop to break-even. This would eliminate the other losing trade. So now, we have a long trade at 1.9179 entered this morning, with the stop at break-even. Lets see how that pans out.
Hold the stop at break even for this trade. The market moved +112 pips after the break of the upper range of the 14 day pivot. Using an initial 30pip stop this is a 3:1 r/r However it doesn't happen that often so to take profit too early would negate the benefits of the trade. I think we should look for a 10:1 r/r at a minimum. So target = 19479
Well that was a close call! The market came within 3 pips of taking out the stop. Quite volatile and a bit schitzo today (the market not me ) Lets see if it can survive the night.
Cable is definitely stalling. The inability to take out 1.9291 probably is leading to a drop off. The 14 day pivot range is narrrowing as the daily range narrows. Our stop at 19179 is still intact, but will probably fall today.
The stop was taken out as I thought it might. The currencies are very confused currently. Having fallen all the way down to 1.9123 cable recovered strongly to 1.9213, and in the process took out the top of the 14 day pivot again. The previous trade was a break-even. Enter long again at 1.9204 (incl spread) with stops at 1.9174. Probably risky going in to the weekend but it was a strong recovery. Lets see if we are still alive on Monday. Good weekend all.
Stop was taken out overnight. It was risky entering position late on a Friday. Market has moved down quite strongly, but the 30 day range is still intact, and so the bullish scenario holds. If 1.8914 is broken this will change. Will be looking to go long above the 14 day range at 1.9186. May not happen for a while.