Listen, I know you're digging the broad strokes. There are many things I disagree with in Fisher's discussion (the moving averages stuff, MAs of pivots, etc.). But the idea that there's no wrong way to use what he's discussed gets under my skin. As he said himself -- take his method he put forward in the book and use it on the indices and you'll lose money. Use the levels as straight-up entry signals and you'll lose money. Draw the OR on the wrong domicile market and you're just flipping coins. Plenty of ways to misapply the idea of capturing the right volatility for the right reasons. What I'm working on is using this stuff as a lens into my own longer term method, and that requires effort and practice. Dreamy mysticism isn't my flavor.
Well, yes and no. There can be debate about this but at the end of the day, all technical analysis is about the presentation of data. Since all that data is historical in nature, TA simply presents that data in a readable format. I personally disagree with Fisher on some things, well a lot of things. But that is probably because we have different trading styles. I have picked up on some things that I'm sure he would disagree with but they actually work, and work quite well. I also disagree with the notion that he or anybody can say if you do this then you will lose money. That implies red light/green light. When I talked to him in person he said that obviously if you just get long and short at the A levels you will lose money and that I agree with. He was speaking about the intra-day signals. But as I've said before, this is a trend following system for the most part. Even the fade trades are and can be trend following in nature. I don't think anybody would look at a gold chart and think short or a bond chart and think short. We might disagree on where to enter and where to exit but both of us should be looking to buy gold, not sell it. A big part of trading futures is not getting stopped out. So it's very important for me to avoid crowded trades and taking obvious trades because those trades will have the most stops and the most whipsaw. In a perfect world you enter in areas on a trend where no one else is. This gives you that level all to yourself and minimizes the risk of getting stopped out. It's important to note what RCG said in that what is nice about ACD is you don't over trade. You don't get long, then stopped out then get long again only to get stopped out and then long yet again. It's one shot. So stop placement and entry areas need careful consideration. This is irregardless of A levels. What I liked about the book is that in the back where he had the trader interviews, he had 5 or 10 guys all using ACD differently. Some barely at all, others used it simply to verify their own instincts. As long as they made money and they understood the price action, that is really all that matters.
The thing is Samsara is that there is nothing mystical about it. The way ACD is engineered you have no choice but to be on the right side of price action if you use the method. And as Mav has emphasized if the method is applied , you will not be one of those poor souls who keep shorting every pullback of a strong bull run day. That alone, nor will you be trying to trade consolidation. That alone will almost guarantee you profit. All trading is to me is hanging around till that 500 pip drop or rise, and having enuf dry powder to exploit that. ACD gives the structure to allow that to happen. Think of ACD as trading restrictor plates so you don't hit the wall and kill yourself. What is so mystical about that?
I think if a person got that far in the book and was happy with it, they were able to take something very nice away from that section. A lot of traders mistake system and method. I know I did early on. ACD is a method to apply a system. If a person does not at least have a grasp of a rudimentary system, ACD will not help them. Most systems try to measure sentiment and the momentum behind that sentiment. ACD makes sure that you are in line with price action also. Put the three together, and it puts the trader in a very advantageous position.
Okay that is great, but whatever you do, when you finish cooking the gumbo, don't add more ingredients after the gumbo is already cooked. Stay with your process of trading. Do not change time frames, do not rework math levels. Decide what you are going to do as far as triggers are concerned and then decide if price action agrees. Mav put on a real time bond trade, and the first thing he mentioned is a monthly A up. I think. Find out which way you should be trading for this cycle, and until that is invalidated, look for good places to get in, long or short.
I agree with your whole comment. I think this particular paragraph nails why, in my opinion, this method has value over anything else I've seen on ET so far. The reason is because, as you say, you're trying to enter in a low liquidity environment where few take positions. Volatility expands, price moves to a level where more take notice, and your risk of being stopped out on the resulting churn is reduced. Let me try to clear up some things here. I won't go into much more detail in the future -- I'm just getting the impression I'm confusing some people in where I am raising disagreements. Your ability to establish a bias, and get in before a volatile move in a thin environment, rests on the premise that there is a correlation between the opening range, historical volatility, and future behavior. This all works beautifully for me because it's simple and makes perfect sense based on auction market theory. You and Fish point out that lots of things can be adjusted while remaining consistent with that core premise. Adjust the OR on the fly to fit relevant early activity? Using a longer OR to look at longer moves? Change your ATR variables? Enter on A or C failures at the previous pivot range? All well and good. The only things I disagree are anything that contradicts that premise two paragraphs above. The idea that any special snowflake can choose <i>any</i> OR is flipping a coin to me. Also, the entire concept of an OR on a longer term chart, for instance, might itself warrant discussion. I thought all of this was already baked in to the discussion -- this is what I'm trying to stimulate for my own and others' benefit. My primary method is medium-term trend following. I track the relative rate of change of several baskets of instruments to inform my directional bias. I exit on either a change in those baskets, on a risk stop, or on an ema in extreme vol environments. I do not look at the intraday price action of the indices I trade for signals. So, I'm looking to expand the instruments I trade (those baskets don't fit cotton, for instance), and also use various ACD lenses to help me leg into index positions at better times, so I can take on more size relative to my stop. This is my attempt to be crystal clear on where I'm coming from and why I'm trying to dig into the specifics of how and when the theory works by talking with others.
I'll just be very brief and clear. I am not saying ACD is mystical. I'm saying the notion that anyone can choose any variable for the method he described and have it remain useful is mysticism. Please just try to resist the urge to re-describe the method and read closer into the specifics of what I am saying; it saves a lot of back and forth.
Okay, please try to find the post where I did not describe the method verbatim as described in the book. I think your own filters are getting in the way. I think that any and all readers would agree with my assessment.
OK, let me add something here. Years ago when I first started down the ACD road I did the free 30 day trial on Fisher's website just to get a look at his A values. I was shocked at his A values. They made no sense to me and were not even remotely close to my A values. To be honest, I have no idea how he could have made money with his A values. But that's what they were. Now he probably has a reason for why he chose those A values. In fact if he sat me down and explained why he chose them I might say, hmm...that makes sense. But since I have no idea how he thinks, his A values look crazy to me.
Not trying to be rude man. I think either I'm being too wordy or your reading comprehension is completely missing something and you're disagreeing with a phantom interlocutor in your head. Maybe reread from page 66 of the thread if you want, but it's all good either way -- let's just hopefully get back to discussing the logic of the method.