@gmst Also, remember, ACD is not a system. ACD is a method. You will need to bring your own signal generator. ACD gives market direction so that you will focus only the signals that your system generates that go along with your bias. ACD gives you a built in circuit breaker. A bad A followed by a bad C and it is C u tomorrow
Thanks everyone for throwing helpful hints about how to approach ACD method. Tips like : ACD is not a system, rather it is a method - will surely help me approach the idea with the correct mindset. King - special thanks for you for those videos. Part 3 seems to be missing from the link you sent. Any clues !!
In the spirit of KISS, I think separating the signal from ACD overcomplicates things. Let say you are trading the ES and you have a signal generator that always triggers after an A up has been confirmed, so that you end up entering at higher prices than the A levels. You are leaving points on the table. Alternatively, if your signal generator goes off before the A up is confirmed, and you buy in anticipation of a valid A, but then the market only confirms some of those moves as valid A ups, you are taking on additional trades that ACD doesn't confirm, which is also bad for your P&L. Or let's say you see an A up but your signal generator will only trigger on a pullback. Again, you will sometimes get the pullback for the lower entry price and sometimes you won't. I know that Mav says he likes to watch price action at the A levels, but that's a very subjective approach. What specific price action is required? OK, maybe that's part of his secret sauce and actually does add value to his trading, but is that going to be true for everyone? Fisher says in his book that the best trades are the hardest trades, which would imply that it would be precisely the price action around an A level that looked the worst that would be the best kind of price action. Seems to me that the best course of action is to buy when an ACD signal is confirmed, because I'm not seeing any systematic way to up your odds of success or the ratio of your winning to losing trades by not buying at that price. I know that I never once considered separating "bias" from "signal" in my trading strategy because I can't think of a logical reason to do so. If you are correct in your bias, that implies that the market's next X number of ticks are likely to be in your direction on a net basis, meaning that every tick you wait increases the likelihood of you getting a worse entry price. Livermore always said that the instant he felt bullish on a stock or the market, he had to buy and I think that is exactly the right approach.
Livermore blew up because he did not have ACD, no way he would have blown up otherwise. Also, Fish himself separates bias from signal, and the very first five minutes of the seminar, he states that ACD is meant to overlay what you already do as a trader, that would clearly indicate that a signal generator should be brought to the ACD party. Not trying to be snippy, just sayin, it might not be a bad idea to look at system vs. method. ACD is not a system, it is a method.
I think this just shows there are many ways to use ACD. I personally use it as a framework to show me where price has gone and where it is likely to go next (if anywhere) and then I use that information to decide if my pre-ACD signals I am seeing are worth taking.
Me also. I look at it as a circuit breaker mainly. My sig generator can sensitive to a single bar, so I have gotten hurt during extended consolidations ACD has eliminated that for me. I trade only once or twice a day, and it works out very well for me.
But fish says in his video a few things that are contradictory. I dont mean that as a criticism, but am just making a point. He says that this is method so simple, he teaches 9th graders this method, b/c they can follow direction and dont overthink things. KISS, etc. Then he goes on towards the end of the video and says how trading is the hardest profession out there, how you have to looking at the markets 24/7 essentially and how he analyzes different news events, etc, etc. Again, I am not criticizing him, but its not cut and dried as it seems. I think the general point is you just cant hit bids/take offers on A DOWNS/UPS, and look at trading in a vacuum.. I believe you can probably develop a system around ACD, using statistical behavior of different products, and favorable risk/reward scenarios.. So in that sense it can be a system, but it cant be out of the box as per the book.