The problem with back testing is that at least the way I use ACD is it's all about relative price action. I may or may not take a trade on bonds depending on what copper and ES are doing. That's very hard to back test. Not to mention taking into account what news came out that day.
If it works well, it should not be that complicated (A up A down trading) it shou be automated with some filter parameters to get to understand what is making it work. mfbreakout mentioned A' up down and how great it is. Well look at the period he chose to "test" the ATR ( average true range) for daily charts is relative high. Take the same method back in 2007, -2009 maybe not work well at all. Or it would have worked great in 2008 volatility then totally give it back in 2009. Need to pick a filter that is allowing it tow work. I bet it could be automated. Question for mfbreakout- has it woked in NG for 2011 ( opposite volatility of CL) ATR shrinking to recent historical low levels.
I disagree. Trading just doesn't work that way or we would all be billionaires. There is a lot of nuance to ACD. It's not black and white. In order to read price action you need to know what the news is, what other risk assets are doing and what the current sentiment is in the market. All those things are very hard to quantify.
So with that said I guess it canât be used in that way. Letâs just hope someone anonymously posts these stellar P/Lâs somewhere so we can believe Otherwiseâ¦â¦
I still think you are missing the point. ACD is not a "system" therefore it can't be "tested". It's an approach, a methodology. There are a thousand different ways to use ACD. So it makes no difference how I use it or how anyone else uses it. I'm just trying to make this clear for you. We have spent some time on this thread discussing it but perhaps you skipped over it. It's a long thread now.
You should try it and let us know...I've had the idea as well, but am focusing on news plays as of late. Here are some parameters that I have noticed may affect the robustness of a signal: -Volatility, look for Narrow range days (NR4, NR7 etc.) -location of pivots(above below A-up/down) -Size of opening range relative to ATR
Shanb now you talking good stuff. Maverick, if your equity curve and metrics look good- your all set!
Let me just say that Mark Fisher is the real fu&*in deal, this is so rare in trading I can't describe it in words.He is an excellent teacher and communicator. I honestly wouldn't have spent 5 minutes on ACD except that when I saw him speak I knew this was a real guru in terms of the mindset necessary in trading, if there ever was one. There are some competent and even a few great traders that frequent et. That said most are unapproachable mainly due to the anonymous nature of the board. For example, I pm'd a trader named wave back when the credit crisis was unfolding, I asked him where he thought the mkt (spuz)were headed he said 750, that was when the mkt was around 1150. Just one of many examples. Alot of guys have left due to the constant trolling that goes on here. Everyone's time is valuable and these type of guys especially. I know Mav has a very thick skin due to his being here so long. The thread below has saved me a ton and I mean a ton of money, good trading. http://www.elitetrader.com/vb/showthread.php?s=&threadid=53037
pwrtrdr Save the time coding. Trading A breakouts is going to get you hacked up. ACD is a method, you bring your own system to the party. ACD is about price action. It is designed to make a trader have a bias so as to eliminate countertrend trading, which is what is ultimately going to kill your account. What you are trying to do is after you get an A, THEN you start looking for a signal. The mechanics of this line of thinking means that you will always be going with trend and buying or selling pullbacks of that trend. So you are going long AUDUSD lets say. The A breakout is your bias. You still need to wait till you get a signal from your system. The key to trading is to be around when the move of the year happens, it is simple to say, but without the discipline to sit back, take your shots risking little to win much, then you will be in trouble. Go back and what those seminars and read that book. It will give an experienced trader some nice tools.
Well, Maverick answered very well in 2 lines why i did not spend time on auto back testing ( besides not really knowing how to do it) mainly how to incorporate news, risk on vs risk off scenario. As far as someone presenting P&L to prove ACD works, i suspect one will be ON HIGHWAY to no where if that's the proof one needs. It does not matter to Mark Fisher whether someone buys into success of ACD trading method as he has been using it for over 30 years and Paul Tudor Jones calls him the best pit trader ever. Heck, as MF said in his book out of 8,000 ( I am reaching down into my memory to come up with this number- so it may not be correct) who took MF course/training etc.. 4,000 slept through the class. Out of remaining 4,000, 3,000 did not had what it takes ( primarily join Bust Your Ass club) and out of remaining 1,000 only 500 or so became really successful. One can blame this on method . My vote is for that not everyone is supposed to be a trader or ACD is not suitable for everyone. Some traders like complicated stuff and some believe in KISS. ACD traders tend to be in KISS camp. If one had the opportunity to meet MF firm traders ( which i have) lot of myths about successful traders will be blown away.