The ACD Method

Great thanks, when you look back at data I suspect this is done a lot manually rather than a script ?

In terms of "layers" I understand you use many layers I currently only have two layers number line and pivots to get overall direction and potential entry, working on stop point now

 

I just go through all my spreadsheets, look for the +4/-4 days, pull up the charts and look at the follow through.

 

How much focus on unit size or contract size do you use or consider optimal f

 

whats this shrinking volatility doing to the number lines

 

ACD is dynamic and very sensitive to change. When volatility contracts, the effect ripples across all the levels. Since the daily ranges are getting smaller, the A values contract. This causes the opening range levels to tighten. The weekly and monthly levels contract. The pivots get tighter. And you'll see price close inside the A levels more frequently. It usually only takes about two trading sessions for ACD to adjust from a high vol to a low vol environment. One of the things that amazes me the most when I go back and look at levels from 2008 to now is how quickly the levels adjust to the current environment. Even a stock let's say that was once a $20 stock and now suddenly is a $150 stock. The levels are spot on. Obviously you work your way out from daily to weekly to monthly to quarterly over time so the QTR charts adjust the slowest but the OR levels are real time so they are immediate.

 

Calculate your % of equity you want to risk. Determine based on A levels where you want your stop to be. Take the equity level and divide by the A level stop and then round down to the nearest contract level.

 

great post!

 

yes it was, great of you to spill all of this Mav, thanks

 

Ammo so here is a chart of es with 10 period average true range, obviously contracting.

 

Do you add to position as it goes in the money and take off position as approaches stop, in other words use multiple contracts ?