Good info... Good To Know... But I don't sign into anything with Google unless completely forced to... Their data tracking is obscene.
Brave Browser works well. I am sure Google is doing and will do sneaky things. Most of the ads I am seeing are about investing and trading stuff which I hate to see. I have selected which ads I'd want to see less of but that function is useless. The ads I'd like to see (eg sexy babes) are rarely shown. Somehow, Google knows what I really like and dislike. So Google shows the ads which I don't like and doesn't show the ads which I like.
PAGES 101-200 Well, they are easy to spot. When the market is weak and confirming an A down, look for stocks that are making A ups. When the market is confirming A ups, look for stocks making A downs. You should see a lot of follow through when the index turns. I'm just trying to show you ways you can use the ACD signals intra-day for stocks. All of our economic growth is coming from inflation. The more inflation we have, the lower our dollar. Japan has had zero economic growth for decades and their currency reflects that. The more money we print, the lower our currency goes. Since stocks have a fixed amount of shares and the supply of dollars that's chasing stocks is increasing, it forces stocks higher. Keep in mind stocks are a spread trade like everything else. It's all relative value. AAPL is priced in dollars. If we price stocks in Gold, equities are sitting near the 2009 lows. Let me put it another way, if you continue to lower the denominator in the equation, the relative value of the numerator goes higher. So when you see a SPY quote, what you are really seeing is a currency trade SPY/USD. Thanks for posting that MBF. Interesting to see how they use the first day of the month pivot vs A levels. I've said this before and I'll say it again concerning adapting the system to your style. The benefit of using the pivot range for the first day of the month over say an opening range with A levels is you are going to enter momentum trades much earlier then waiting for an A level confirmation. However, if you are looking to fade moves, then you are better off with a wide opening range and A levels vs the pivot range. I'm not sure what Sam's trading style is but just wanted to point this out. Let me give an example. When volatility starts getting very high, the problem with A levels, at least in my experience, is that you have to wait so long to get short (assuming we are talking about ES in a down market). The market might have to drop 100 handles before you get a sell signal! The monthly pivot will get you short much faster and with a tighter stop. Again, I'm not trying to tell anyone they are right or wrong because everyone on this thread has a different trading style. I just want to point out the nuance between the different ways to use ACD. I'm stating the obvious when I say if you are a momentum trader, you obviously want to get in "early". If you are a fader, you want to get in "late". Just understand what happens when ranges start getting wide and volatility explodes. This maybe why Fisher is showing the first day monthly pivots vs the A levels. It is a recent thread, thank you for the information. The link is here: "The Logical Trader" - Thread to develop manual trading using insights from this book @ Forex FactoryLet me copy your formulas for A and C values here aValue = (0.10 *((ATR10Days +ATR30Days)/2)); cValue = (0.15 *((ATR10Days + ATR30Days)/2)); (FROM @RCG Trader) A lot of it is Gann stuff. I don't know if Fish is aware or even cares about that. But ACD has allowed me to deploy my knowledge about Gann better than I ever have, and it is working well. The thing is about reference points. So without getting away from ACD the A B C and D all provide reference points. Aside from that, if the trend is down, based on his triple MA's, don't take that A up. If an A up fails, and the trend is with you, you don't need to wait for the A down, take the failed A up. It is all about reference points. As far as risk goes, manage your risk according to your disaster stop. Point B and D. Now you should stop out well before that on time or the MAs becoming confused. But on the rare occasion that you take a trade on a black swan bar, then when your disaster stop gets hit, you don't lose more than X percentage of your account. ACD sets up a no lose situation, meaning a no blowup situation. Again that is if you already have a way to generate signals. OK, I'll throw out a bone here. For stocks, the best way to look for good confirmed A ups and A downs is to look for narrow open ranges. You want to program this into a ratio. Take the OR into say a 30 day ATR. Then run the scans during the day to find the tightest ratios, for example all stocks under 20%. From this list, you look for confirmed A ups and A downs. Combine that with stocks with narrow pivots or narrowing pivots, and you will find your breakouts. To further add to this, you can do the same process with stocks using a 30 min OR and look for late morning breakouts which actually tend to have more follow through then the early morning breakouts or breakdowns. The problem with the failed A trades is noise. There just are too many of them and you will never find the best ones nor will you have any ability to filter for the nice ones. They will all be random. The breakout trades can be isolated. For example, you can get very very narrow by lowering the OR/ATR ratio to 15% or 12% to really fine tune the breakouts. You can't do this with fade trades. Simply looking for stocks with wide OR is meaningless because some will provide great fades and some will not. That's like saying the market might go up today or might go down. This will become very frustrating over time the sheer randomness of it. The thing with fading is it's synthetically the same as selling option premium. It has a high win rate with small wins but it can get ugly. Right now we are in an environment where stocks are not moving much because they are waiting for this news out of Europe. Fading everything is working right now! I assure you, it gets ugly when it stops working. And I don't mean that you will have one large loss. It's just the environment will change where you will take hit after hit after hit. Mean reversion is the one strategy that never seems to go away yet it is solely responsible for eliminating more trading careers then any other strategy. The trading Gods are cruel like that. Well, as I said before, if one is going to trade equities, your long term success will be almost entirely dependent on your ability to select the right stocks. Not an easy task, but then, trading is not easy. After you have been doing this for a while, you will develop a feel for what's going to move and what's not and what will have follow through. The problem is once you set your mind to looking for fades, all the momentum moves disappear from your sight. It's funny how that works. It's all about how your train your mind to look for opportunity. Somewhere in market wizards is a story about a guy starting on the floor back in the day, and he is getting out of a losing position over and over again. I forget the exact quote. This escaped me the first time I read it, the point was they were trying to induce muscle memory aversion to losses, wrong get out, wrong get out, trend, ride that till the end of time. All the great ones have that same ability and even some of the great ones blew out. Its all in Larry Hites' chapter in market wizards, that's all you need really My rule is I never take trades in the opposite direction of a confirmation. Much easier to look for entries in the direction of the confirmation. Much easier! That's one of the greatest things about ACD is not the trades you get into, but the trades it keeps you out of. I can't tell you how many times I had to sit on my hands doing absolutely nothing bored out of my mind waiting for a trade. Thank God my discipline is probably in the 99th percentile. "The best traders sit on their hands 80% of the time" Mark Fisher That's funny. I don't know any trend followers. I run a prop office and not once did I have a single guy trade trends. All of them were faders and all of them lost money. I think part of the reason for this is because when you fade, you have a reference point as a stop, and that makes managing the trade easier for some. Managing stops in a trend is much harder and requires far more work. As far as limit moves go, "usually" they are in the direction of the trend. Probably 90%. Faders, please for the love of your family, don't trade commodities. Stick with stocks or indices. Commodities are all about trends. And there is no such thing as over bought or over sold. Let me add some more on the tight opening range theory. The benefit of the tight opening is two fold. One is, you get a tight stop. Two is you are getting long volatility on the lows. If you are wrong, you might actually get an even better trade i.e you buy a breakout in a tight range only to end up getting short and catching a massive move. I have seen this far too many times. Where the initial move is false but the real move is in the other direction. This is very hard to catch if the opening range is wide because if you get stopped out on a wide OR, you just took a beating. Very few people will have the cajones to then get short with an even wider stop. The tight opening range gives you the ability to buy the straddle so to speak. And on the cheap. That's all you can ask for. This is why I have stated many times the benefits of trading multiple markets. This way you can focus on only the products with the tightest OR. I read a quote the other day about trend-following that really summed it up for me. It said, basically, "To do trend-following correctly, you have to believe you are part of something bigger than yourself". I really do think that's Step 1. Did. The key word was "did". I actually had a mentorship agreement with Fisher to teach these guys ACD in Chicago. Here's the kicker. None of them were interested! Even though I taught them ACD for the year preceding. And to answer your next question, none of them are still trading. I think the term "trend following" is more about a mentality then actually describing price action. A trend follower by definition acknowledges that they have no ability to predict the future and simply follow price. There is very little analytical work done. I think ACD is a combination of trend following and price action so it's more of a hybrid. Most bad habits from new traders come from them trying to tell price what to do instead of the reverse. A good trader listens to the market, not to their mind. You will see this all over ET when guys talk their book. Explaining to you why the market must go lower or higher. They will talk your ear off if you let them. And when price goes the other direction they tell the market it's wrong. Another major problem traders have is they have two separate game plans. One is the game plan before you enter the trade. The other is the game plan once you are in the trade. They should be the SAME game plan. The problem is, very few people can stick to their discipline once the trade is live. This is a serious serious problem. I don't chase momentum into the 2nd half of the month. I'll take fades after that. That's just me. Everybody has a different personality. Shan, you should also probably look at using relative volume as a filter intra-day. There are many indicators out there that will give you the % of today's volume relative to say a 30 day average. When you put this indicator in a column it allows one to quickly sort all the more active stocks to the top. If you combine that with the tight opening ranges and tight pivots, you should have yourself everything you need. Q: I mean buying an a-up with a pivot range above. Or selling an a down with pivot below A: Yeah, not a good idea. But if price breaks above the pivot and confirms the A up then you can use the bottom of the pivot as your stop. Don't fade!!!! Seriously. The thing you need to understand is 90% of the people who trade futures are under capitalized. Say this to yourself 100 times and don't forget it. They have no pain threshold. So when price breaks out it's going to pop hard, I mean really hard. So learn to identify trends. "When it comes to trading macro, you cannot rely on the fundamentals, you have to be a tape reader, which is something of a lost art form. The inability to read a tape and spot trends is also why so many in the relative value space who rely on fundamentals have been annihilated in the past decade." In regards to tape reading: "Certain people have a greater proclivity for it because they don't have the need to feel intellectually superior to the crowd. It's a personality thing." I agree with Fisher that volume should not play an important part on any individual trade. However, if you are going to scan thousands of stocks, I think volume has to play a part in that scan. High volume mitigates the effects HFT's have on the stocks you trade. If you trade low volume stocks the momentum is going to get faded too easily. I want to follow up a little on the number line. One of the things this is useful for when making longer term swing trades is to check the health of the trend. What we want to see are A ups. A quick glance shows us the strength in the grains even though they have not made monthly A ups yet. Corn already has 3 daily A ups, soybeans 2 and wheat 3. This gives you a lot of information about the "real" internal strength. Coffee has two plus 3 days already which is very impressive. This means coffee traded down to the A down level, held, rallied up and through the A up and confirmed and did that twice. Very impressive. Something that does NOT show up when just looking at a daily chart. When we look at the risk assets we get a very mixed picture. There is absolutely nothing to lean on long or short which is why no one should be long or short. Between the ES, Copper and Crude we have no A ups or A downs in the spoos, Copper has just an A down and crude oil has one A up and one A down. When we look at the flight to quality trades, we don't get any clearer picture. Bonds have only made one A up and so has the dollar index. There is absolutely no real strength or weakness to speak of in the risk assets and they should be avoided. This is the real value of the number line. To look under the hood and see what is "really"' going on. As I've said before, I want to see two confirmed A trades before I take a monthly signal. Live cattle only has a plus 3 number line but it has made two A ups. Coco as I mentioned before traded up to the monthly A and failed and sure enough it has a -1 number line. Obviously if the grains confirm next week, that is the trade you want to jump on by the number of confirmed A ups we have already had. One of the things the number line has done for me is many times when it looks like the market is breaking down or breaking out, the number line is not confirming that price action. This has kept me out of a lot of trades that had no follow through and instead had violent reversals. I hope this helps bring some clarity to the number line approach. Here is another way to look at it. You can treat the number line like a hand in poker. Knowing what beats what at the table. Obviously not all plus 2's are the same. An A up beats two failed A downs. A plus 3 day beats an A up. A plus 4 day is tricky. While Fisher assigns it a higher number value, in my opinion a plus 3 day trumps a plus 4 day. I rather see the product fail at the A down and make an A up then confirm an A down and then confirm an A up. So think of the number line days like hands of poker and you will start to get really good at reading the market's hands at the poker table! Let me add further to this. Regarding the number line, one has to note the quality of the numbers as mentioned above. One of the interesting things about how Fisher decided to derive value was by assigning negative strength to failed A ups and positive strength to failed A downs i.e -1 for the failed A down and +1 for the failed A up. However when I break each product down and look at the individual daily numbers, I think I would rather see a negative number if it's derived from failed A ups vs a positive number line from failed A downs. Let me give an example. Say the ES has a plus 3 number line for the month and CL has a negative 3. One would immediately assume, all things being equal, that the ES is the stronger risk asset. However, to me it's the opposite. What this number line is saying is that ES seems to be selling off every day down to the lows. Sure, ES is not confirming and bouncing off those lows but when compared to CL, which is rallying every day to the highs and failing, I would go with CL as being stronger even though it carries a -3 on the number line. I think making sure you understand what the number line is telling you is very important. This is another reason why automating it might be problematic. You want to be able to look under the hood and see what is really going on. And for those of you who have been hesitant to read further up on the number line, please do. There is absolutely no way one can look at a daily, weekly or longer term chart and decipher what the number line is telling you. The number line is completely hidden and embedded in the internal structure of the market and it does not reveal itself on any charts. You would be wise to learn and master it so you can verify the readings you are getting on your A levels. Ill throw out a little bone here ala Mav. Well alot of this has probably already been said by him and different times throughout the thread. Been running a log of my mean reversion trades and have found a strong correlation between the size of the OR and the success of trades. I am using a 20 minute OR. For about 100 trades: -Fades with an OR< 40% ATR(10) Profit factor= ~.9 Winning %= 40% -Fades with an OR>40% ATR(10) Profit factor is=2.7 winning % is =65% These are trades with 20 minute OR's, comply with my other conditions for non-skewed stocks, and are at the second standard deviation of the VWAP. In other words meant to be mean reverting. If you prefer taking the breakouts you can reverse engineer this and add some other stuff and you can have a good breakout approach! In fact I have noticed on the smaller OR's the fades have a very high failure rate Some things I've noticed for breakouts...use a 5-minute OR, for the OR size as a % of ATR just adjust to account for the shorter time period. Don't fade the pivot. Look at relative volume to avoid the bots. You got yourself a nice little system Let me clarify a few things here. There seems to be a misunderstanding of what the daily pivot range is and isn't. I better nip this in the bud before any of you guys spend too much time back testing various scenarios. The daily pivot range has nothing to do with volatility. And measuring a declining pivot is not the same thing as declining volatility. What the daily pivot range is, is simply a measure of where the market actually closed relative to the median of the day's range. That's it. You could have a 50 handle range in the ES with a very tight pivot if the market closed right in the middle of the range. You could have a 10 handle range in the ES with a wide pivot if the market closed on the high tick. What Fisher was trying to do was capture the information the market was giving you relative to the close. If we get repeated days where the market closes in the middle of the range (i.e a doji) then there is a good chance that the days following will produce follow through. And vice versa. If we get several days where the market closes at the high of the day, there is a good chance we will have choppy and sideways market action to follow. It's NOT a volatility measurement nor is it forecasting volatility. It's forecasting follow through. I just want to point this out because I get the impression on here that many think the daily pivot is a volatility indicator. If you want to measure volatility you can use a high-low range calculation. I use to do this. I use to graph the high-low on a rolling basis on a chart and it corresponded somewhat with the VIX in that once ranges got really wide, they tended to produce less volatility going forward and rising risk asset prices and vice versa when volatility got really narrow. It wasn't terribly useful because you could not actually time anything, it was just a rough indication. Now I should point out that there "can be" a volatility component priced into the pivot. For example say you had a 50 handle range in the ES and we closed at the high. Obviously that pivot would be wider then if we had a 10 handle range and the ES closed at the high. However, there will be several very wide range days that will produce narrow pivots due to where the market actually closed. I think this is important to understand. Again, Fisher used this as a way to guage the probability of follow through on A up and A downs. He wanted to know if today the market was more likely to close at the extreme end of the days range i.e the high or low of the day. Therefore one would think that narrow pivots produced more follow through on A ups and A downs and wide pivots produced less follow through, but not less volatility. Follow through and volatility are not the same thing. Let me add one more thing regarding mean reversion and wide ATR's. I'm going to use my favorite word again, nuance. In 2008, we had very wide OR almost every single day. And despite the wide OR, the market had a lot of follow through. Fading the A levels didn't work. However, when we are not in a "crisis" market environment with normal ranges, then fading A levels with wide opening ranges works very well. So there is nuance to the price action one has to understand. Not all wide opening ranges are created equal. Right now fading works well because the tape is dead. There is no volume and all the action is in the over night markets with news out of Europe. So every different market environment is going to have a different tape. I've never been a fan of max pain theory. For every circumstance where it appears to be useful there are just as many where it's not. Random! There is some credibility to the idea that high open interest strikes do attract price on or near expiration due to the gamma scalping. The strike acts like an orbit where if price is inside the orbit it gets pulled in. But if it's not close enough it's irrelevant. In the end, it all still boils down to this; KISS Lose small Let winners run Pour on the wood when youâre right Remain disciplined, patient, open and unbiased, and humble throughout your career No one knows what the hell is going to happen next Wash, Rinse, Repeat â until the day you retire from trading First lesson - learn to do the necessary work RN Going forward, I want to spend more time going over spread markets. Using ACD to locate and execute spread trades with solid edge. Nominal price alone has always been a terrible way to evaluate a given market. Everything must be evaluated relative to something else. I'm going to give a simple example here. Being long the SPY against a short XLF, the financial ETF. While many are trying to top pick or bottom pick the market, the irony here is that both sides can put on this spread and express two completely different points of view while making the same money. There is two ways to look at this spread. One could say he is expressing his view that the market is going higher led by the large cap stocks. And she can be expressing her view that the market is going lower led by financials. Both have the same trade on, both sitting at or near the high of the year. This is how you find edge. Not by getting short SPY because you think the market is going to zero or getting long SPY because it's a new bull market.Going forward, I want to spend more time going over spread markets. Using ACD to locate and execute spread trades with solid edge. Nominal price alone has always been a terrible way to evaluate a given market. Everything must be evaluated relative to something else. I'm going to give a simple example here. Being long the SPY against a short XLF, the financial ETF. While many are trying to top pick or bottom pick the market, the irony here is that both sides can put on this spread and express two completely different points of view while making the same money. There is two ways to look at this spread. One could say he is expressing his view that the market is going higher led by the large cap stocks. And she can be expressing her view that the market is going lower led by financials. Both have the same trade on, both sitting at or near the high of the year. This is how you find edge. Not by getting short SPY because you think the market is going to zero or getting long SPY because it's a new bull market. Here is what I'm trying to get you to do. Nominal price is worthless. Everything you do in life including trading is a relative value proposition. Who you marry, what you eat for dinner and what you decide to watch on TV tonight. Too many people get caught up in watching price go up and down like a yo yo and they end up chasing their tale and never making any money. The idea is to understand price action by looking at relationships in the market. Let me give a more simple example from my daytrading days. Back in the day when I traded listed stocks, I was a tape reader. Now even though I wasn't trading pairs per se, I usually was long strong stocks and short weak stocks. But the primary driver in my decision making was watching how a stock responded to a change in tick in the S&P futures. If I was long BBY I watched it very carefully how BBY ticked up and down relative to a change in tick in the futures. And vice versa when I was short a stock. So even though I was not spreading BBY against SPY, I was acutely aware of the relationship. The guys at my firm that took home checks from trading understood the "relationship" between stocks and futures. The guys that didn't take home checks simply looked at nominal price movement. Everything I do now is about price relationships. This is what ACD is for. Using the ACD levels to identify relationships in the market. What is the ES doing relative to bonds, to oil, the dollar or even AAPL. The idea is to capture the essence of that relationship either directly by saying, getting long Crude Oil, or expressing that idea through a spread. In my opinion, most of the guys on ET, about 90% of them, don't make money trading because they see the market in a vacuum, not in relationship terms. They are too focused on watching just one product or they get hypnotized by watching the product they are trading go up and down the way a cat watches a toy at the end of a string swing back and forth. If you don't understand relative value, all you are doing is pawing at the toy watching it go back and forth. Well in terms of risk assets, they all have some correlation. I'm not referring to spreading Corn against Oil. But Corn is a more pure product. In other words, you don't have the same risk as it being dragged down by say an uptick in bonds. Of course within the grain complex you can spread corn against wheat. But what I'm getting at is the noise pollution you get when one asset class contaminates another. For example, say you get short the SPY outright. And the Euro catches a bid or AAPL, they can contaminate the price action of the SPY and pull it higher. You need to be aware of this. The only way you can isolate yourself from this is make sure you are short the weakest product that will put up the biggest fight against that pull. And vice versa if you get long a risk asset. Just as before when I talked about looking for clean breakouts and clean moves and using ACD to find those, you want to identify instruments that will have clean price action. Why would I short AAPL for example if it's the strongest stock today knowing that if the NQ upticks, it's going to grab AAPL by the hair and pull it up faster? Now any noise that pollutes the index market will interfere with my AAPL short. I want to get these thoughts down on paper before I forget to mention. One of the biggest aha moments I had in my trading life was when I started reading about these large macro hedge fund traders when they would put on a trade and swap the denominating currency to spike the return. In other words, say you wanted to get long AAPL. But instead of buying AAPL in dollars you could buy AAPL in Yen and add 10% to your annual return. Something as simple as swapping the denominating currency can dramatically change the trade. That was such a big revelation to me as it got me to think about trades differently. You'll often hear someone like Dennis Gartman say he is long Gold in Euros, not dollars. Or buying a bond in another country and not only earning the interest and principal return on that bond but also the currency appreciation. The great Brazilian Bond trades of the 1980's come to mind where traders made 50% plus returns being long government bonds on foreign countries from the currency appreciation. I use more of a qualitative approach. So It's not just how much time price traded below there but also price action. If I see a lot of wicks below the A down I tend to discount it. Yesterday the market felt pretty weak and we stayed near the lows long enough to say it was a confirmed A down. Fisher believed in 30 day cycles. I personally have not seen much to validate this but he does use a 30 day numberline and I have noticed that when you drop off that data point from 30 days ago that is has an affect on the number line. I'm not sure he backtested that idea or not. Long bias A --------------------------- D --------------------------- Opening Range B -------------------------- C ------------------------- Above A â Go long B = Long Stop/ Neutral bias Below C - Short D = Short stop/ and go home if price hits after making an A up first (total two losing trades) =============================================================================== Short bias C --------------------------- B --------------------------- Opening Range D -------------------------- A ------------------------- Below A â Go short B = Short Stop/ Neutral bias Above C â Go Long D = Long stop/ and go home if price hits after making an A down first (total two losing trades) A & C levels the same for stocks, and often times are called A ups / A downs... A+/ A- (eliminating the âCâ) Book may not reference a âBâ level, but videos do â itâs the area to exit the first loser, from either a long or short.., and become neutral biased Please remember ACD is a framework to trade within, not a trading system in and of itself RN Most of the time the top/bottom of the OR will be too far away to use as a stop. Time-stops are something that Fisher always mentions. If you are in a good trade, it should work relatively quickly. The trades you want to be in are the ones where other people are exiting and pushing price in your intended direction. If this does not occur, you may be the one trapped LOL. One thing to note...with the prevalence of HFT and algo trading in many markets there will be alot of backing and filling in some instruments. Mav has talked about this before, choose the instruments that will have real order flow and not just computers providing liquidity! Most definitely 1/2 the OR - for a time stop His stance is immediate gratification, or get the hell out RN You are over complicating it. It's all about price action. When we get an A up, you have a long bias. You can use the pivot "if" the pivot appears to be holding the price. If it's not, the pivot might not matter. As I've said before on this thread, different products have different characteristics. Crude oil does not behave the same way as the Euro or ES or Bonds or AAPL for that matter. You need to pick your spots. You need to use time stops. You need to watch the price action of all related assets. There is a lot of work involved. As there should be. Sure, in a perfect world you would find both. But you could settle for just one of the stocks breaking out or down and the other showing relative weakness or strength respectively. Think about it, if you take a long stock at an A up and a short stock at an A down, both are legitimate trades on their own. By spreading them you just remove the market risk. I look at dollar amounts because I want to be long volatility. I do prefer to spread ETF's vs stocks unless you have a really strong move because of the gap risk. Mean reversion is another term for short volatility. I don't like playing mean reversion. You are basically selling premium. Make nickels and lose dollars. Mean reversion traders are generally volatility neutral in that they are trying to capture the "excess" volatility in a pair. I want to be long volatility. I want to make dollars and lose nickels. There is another difference though. Usually mean reversion traders are trading highly correlated relationships. Where as mine are "loosely" correlated. For example, trading Coke and Pepsi. Let's say they have a correlation close to 1 and ideally you would trade that pair with the same volatility parameters. I might trade long AAPL against short Copper. Both being fairly correlated to SPY as they are both risk assets. But by no means should AAPL and Copper move lock step with each other. An easy way to know if you are long or short volatility is just see what your p&l would do if a large outsized move happened to your pair. Usually a mean reversion trader will get killed in that scenario. If I'm long AAPL and short Copper and risk assets sell off hard, Copper could fall 30% while AAPL might sell off 10%. I'm synthetically long volatility in that spread. A stat correlation trader might be short Copper and long FCX which are very correlated. If Copper starts to sell off hard, he might be looking to buy Copper and sell more FCX "hoping" the pairs reverts back to the mean. Just different ways at looking at the market. Neither one is right or wrong. Some people like to sell premium. Don Bright and I have had some interesting chats on here about the pros and cons of pair trading. Don has spent quite a bit of time teaching that method to his traders. I of course played devil's advocate in those conversations so the reader can get both sides of the topic. If you are going to trade mean reversion, the more money, the better. It's really ideal for large hedge funds and banks, not small traders with 20k in capital.
ah I see, thanks. These go detail into his method, interesting. Going to read it all over to distract me from messing with my long trade.
Yea the main guy I quoted was handled: "Maverick74" and he was one of the few (probably) legit traders on ET. Back when this thread was active I think the concentration of success here was higher than today.
It's all in hindsights but today its and example of the ACD method. A strong ORB above yesterday's swing high. Although I didn't trade the ACD entry today since I was already long last night, I looked for "ACD" to give me my target and tell me if I should make this a potential "hold to end of day" trade. Now it's a matter of letting the market stopping me out.
Unfortunately ACD is worthless to anyone not already a good trader...like all methods. You are either one of the chosen few or you are not.
Wrong! It shows ads especially when you are not logged-in. And logged-in users get even personalized ads, ie. that's even worser... Conclusion: it always shows ads, sometimes even 3 ads at once! Google has become greedy AHs.