The ACD Method

Discussion in 'Technical Analysis' started by sbrowne126, Jul 16, 2009.

  1. tmathios

    tmathios

    i am studing the acd method and i have a few questions.
    1) about the opening range mark says that you must find the domicile market of you what to trade to be valid. i guess for exampe when you trade usd/gbp he means the time that london stock market opens. if you trade metals or energy on nymex what is your opening range?i found that open outcry for crude oil is 9:00am est time. is it valid if i use open outcry for metals or energy i trade? i normally use the first 15 mins.(i dont know if that is correct)

    2)i am also confused on how to measure the number line of 30 past days. you measure it depending where is the close. if i trade qrude and lets say i use the open outcry (9:00 am est time) where is the close? i use IB platform to trade and for the crude oil it says Regular tradinf hours is 9:30 am - 4:00 am . should i use 4:00 am as the close to cound this number line,should i use the open outcry which is 9:00 pm to 2:30 am or the end of the day at 00:00???

    3)the same question i have regarding the pivot range.how do i measure it??taking acount the open outcry (9:00 am to 2:30 pm), the regular trading hours as my platform says is 09:30 am to 4:00 pm or the whole day from 00:00 to 00:00 next day???

    i just mentioned crude cause i see in the forum many people trade it but the same question i also have for currencies where i dont know when is the open and the close as the trade all day....:confused:
     
    #41     Nov 24, 2010
  2. Maverick74

    Maverick74

    Yes for the opening range you use the pit open. For the purpose of the number line you use the pit close at the close. That is still used as the settlement price. For pivot ranges I use the 24 hour market cycle. As far as the time used for the opening range, that is entirely up to you. Let me help you out here. If you are a fader and counter trend trader, use a wider opening range. If you are a momentum trader, use a narrower opening range.
     
    #42     Nov 24, 2010
  3. tmathios

    tmathios

    Maverick first of all i want to thank you for the quick and precise answer you gave me.

    i also have a couple of questions for you. as Mark says to get an A up you ve got to wait half of the opening time. lets say your opening time its 15mins and your Aup for GC is 1358.15. if i have understand it correct he means that gold have to trade 1358.15 and higher for 7&half mins. if it trades for 4 mins there, then drops to 1357.90 and then after 1 min goes over 1358.15 should i have to start counting 7&half mins from the beggining?
    Secondly if it starts trading 1358.15 and at the end of the 7and half mins have reached 1362 should i take the position(of course if all layers of acd method says me so) or its to high from the Aup?

    And last question is about time. Mark says if you take the position and it goes nowhere for time equal to the opening range just leave it. if you go to his book at page 136 at the chart of unleaded gasoline at May 11 it says get short at Adown. if you look the 2 folllowing bars you can see that market didnt go anywhere,why he keeps his position to the next day and he doesn't get out?

    thanks again for your previous answer:)
     
    #43     Nov 25, 2010
  4. ACD gives you a bias for the remainder of the day, you still need to know how to trade.

    So for your example if it gives you an A up, you wouldn't automatically get long because it could still close below that value or below the A up level but above the opening range, or within the opening range ect.. If you watch the seminar that he did, me mentions that if 30days ago the market put in an A up, closed above the opening range (using the number line), and it opens above the pivot, he might get long a little when it trades above the opening range knowing 30days ago it put an A up and closed above the opening range, you have protection of the pivot ect...thats where the layers of ACD comes in.

    The question about time is Mark likes to trade when he can trap people. So if he gets into a trade and it goes nowhere, he will usually get out of some of the position because he believes the longer it just sits there the more people can take the same trade, and the herd usually gets slattered. He talks about this also in his seminar.

    I'll tell you how 1 trade thats works well for me with the ES. If we have an A up, 30 days ago we had an A up that closed above the opening range (the number line tells you this). Then say coming into the close if we are trading in the opening range, I will look for a reason to get long and set my stop at the bottom of the opening range. Again it just goes back to ACD gives you a bias, but you still have to know how to trade.




     
    #44     Nov 25, 2010
  5. Maverick74

    Maverick74

    Like kingdong said (can't believe I'm saying that), you have to be able to trade first and foremost. ACD is not a red light/green light system and that is where people struggle with it. ACD to me works best for price action traders and tape readers because ACD is all about price action.

    So take gold for example, if I'm trading gold, I'm also watching the euro, oil, spoos and silver. I'm also watching the ACD on those products and what they are doing. Are the spoos strong? Are commodities strong, are they confirming A ups? Is silver stronger then gold? If so why? What are the macro signals, is Gold trending up, has it been sluggish? How is it responding to news?

    All these things are very important. As far as the ACD details, ACD is about three things, time, price and volatility. If Gold is making an A up, it doesn't need to stay above the A up for half the OR time, I would like to see it there at the end of the time period. And again, even if it confirms I may not take the long. Because it really depends on how price is acting. This is why you need to be a good trader. You can't just buy it there. You have to look at all the other factors I mentioned above.

    As far as the C down. Mark would do those late day C down trades and hold them overnight expecting a gap the next day. This is usually a good trade because it's usually a market reversal day. When you get a really good strong signal and the market is strong all day then late in the day, rolls over, makes a new low and closes below the C down. There are a lot of longs trapped that were buying the dip late in the day that got stuck and now need to get out. They are hoping the uptrend resumes the next day. If it doesn't, then they need to get out fast. That is usually a good overnight trade. Again, though with everything else, you need to look at all the other factors. ACD is not a magic formula. But if you are a price action trader, there is nothing better out there because it captures the three dimensions of trading perfectly (time, price and volatility).
     
    #45     Nov 25, 2010
  6. tmathios

    tmathios

    thanks both of you for the help.
    as far for the late C you said, you mean at the end of the pit trading? eg for gold 1:30 pm est time?

    also i would appreciate if you can suggest me some books that i can buy regarding trading.

    thanks again!
     
    #46     Nov 25, 2010
  7. Maverick74

    Maverick74

    Yes, the end of pit trading. Most of the stuff I would recommend is the classical old school stuff such as all three Market Wizard books. Also "Reminiscences of a Stock Operator". Other favorites are "Fooled by Randomness", "Against the Gods" and of course "The Logical Trader".
     
    #47     Nov 25, 2010
  8. tmathios

    tmathios

    i ll check them! thanks again for your help
     
    #48     Nov 25, 2010
  9. My advice is to skip all these 'story books' Maverick recommended and dig into Market Profile and watch the DOM for a few weeks(around certain times).
     
    #49     Nov 25, 2010
  10. Maverick74

    Maverick74

    I would "not" recommend market profile with ACD. One of the problems I think traders have is using too many different methodologies to trade. All market profile will do is confuse the ACD stuff. I have nothing against market profile or any method for that matter. If one wants to use market profile, then use that and not ACD. If one applies ACD correctly, they do not need market profile.

    As for those books I recommended, I intentionally did not want him to read "how to" books as most of them suck. Rather I suggested books that focus on "thinking" and the more abstract ideas of trading.
     
    #50     Nov 27, 2010