Excerpts From the (1400 page) ACD Method Thread (Mark Fisher)

This will be an ongoing project pulling excerpts from THIS THREAD. Most of it is taken from Maverick74 but a few others contributed as well.

I'm sure ACD is old news to most of you but I've never heard of Fisher or his methods until just recently. What I found interesting was how similar this was to something I was developing myself to trade CL breakouts, (I was using a wedge based on opening price range).

I am really liking this Mark Fisher guy...the info he presents speaks more to me than anything I have seen from a Volman or Brooks. IDK maybe some of the OGs will chime in about how much of a hack he is (like usual) but a lot of what i'm seeing in his book and the videos just feels right.

I will say this right off the bat...pure ACD looks to me like it will suffer the same issues of any ORB system...you're going to get stopped out a lot. Supposedly MF himself said if you just strictly follow the ABCD levels you will be a net loser...YOU STILL HAVE TO BECOME A GOOD TRADER. This is not some magic that is going to make a bad trader profitable.

Essentially, ACD looks to me like training wheels for price action. Levels are provided to lean on for risk management firstly...and force you into moves that potentially have some follow though. Some other stuff: The Importance of time over price (time stops to avoid the "bus People" crowding your trade, price needing to spend a certain amount of time above/below A/C levels to enter), capitalizing on trapped traders looking for an exit, etc...good basic concepts.

Here is a video series of Fisher giving a seminar about ACD:


as usual all commentary is welcome both positive and negative, hateful or otherwise idc. Would love to see some more recent info specifically about this method...Mark hinted in an interview that he was writing a second book but who knows.

 

EXCERPTS FROM PAGES 1-100 (14 pages of material)


Using 20% to 25% of either a 5 or 10 day ATR is a good start for both the A and C values.


Regarding the opening range, you will want to set that time based on your trading style. If you are more a counter trend trader, you will want to use a wider opening range. If you are more a breakout trader or momentum trader, use a narrower opening range.


good approximation of the current "A" value for any stock, would be to take 30 day average range (h-l) and use 20-25% of this value


Per Mark's website (trial subscription) the Opening Range for CL is 45 minutes starting at 8:30 am ET (yes, before pit open) and A value is still .08 an C is .13


Get people caught so they want to run for the door.


Reversal pattern-He shows two down days in a row, lower highs and lows and closes and third days is a gap with the open higher than previous two closes: No one likes to buy gaps; If there is a gap, he wants to trade the higher gap because more people are hung or trapped.


Do you think that works (is there an edge here)? If everyone can see a chart pattern like an outside reversal day can it work? The answer is no.


The market Murphy’s Law: The market is there to screw the most amounts of people, to inflict the most amount of pain, to torture the most amounts of people, in the least amount of time. And it does exactly that.


He thinks the slope of the moving averages measures the rate of change of the market’s perception of the market.

For moving averages he likes 14, 30 and 50. It’s his favorite in all time frames.


MAD move is a moving average divergence move. Moving averages are diverging. You get an extreme move and fade it.


Moving average fake out: Ma’s are rising and price drops below the 14 and reverses back up off the 30 and goes above the 14 look to buy at an A Up.


Minimize your risk by time, not by price. Time is a much more important stop.


They found “With the meat of the market concept” that when you have very narrow pivot ranges, the next day will often be volatile (have juice). That’s what you want if you’re a breakout or momentum trader.


Narrow pivots tend to predict volatile sessions.


In the markets they track, they look at the last nine trading days and ask “Is this the narrowest pivot of the last nine days?” If so, they want to trade it.


Also, if you have three consecutive smaller pivots, they like to trade it.


The best traders sit on their hands 80% of the time.


3) When taking the opening range, pay attention to previous day high/lows, weekly high lows etc. These can serve as good take profit targets or signals of continuation should price break through these levels.


On a similar note, lets say on any market, the first 15 min bar after a breakout shoots extremely far out of the opening range; if you are a "hold to close" type of trader, you may want to instead take profits at that moment knowing that such a move beyond this level is less likely. How to know this? Familiarity with the market you are trading/tape reading, knowledge of probabilities relative to standard deviations etc; the type skills as pointed out by maverick.


6) after a major A up/down parabolic trend day, the following day is less likely to have another trend day.


9) Excellent a up/down trend days rarely have price hanging inside the opening range for very long after the opening range is established.


Don't trade ACD after a wide range day. Because normally there is consolidation and this is bad for ACD.


Important note though, always fade in the direction of STRENGTH.

I'll thrown another bone out there. When pivots are located in the middle of the opening range, they work as great entry levels once you get a confirmed A up or A down to enter. You want to see price bounce off the pivot first before entering.



One more thing, the width of the pivots is helpful as well. Tight pivot ranges usually indicate a volatility increase and very wide pivot ranges usually signal a range bound day. In other words, be careful about taking A ups or A down on wide pivot range days unless the pivot range is located above or below the entire days range, i.e we opened above it and never traded into it and vice versa.


If you're trading grains and you take an A-down or A-up, on a very good rally/selloff day you should be able to put your stop right about the low of your A-up confirmation bar for longs and vice versa.


You will get stopped out much more frequently on non-rally days, but if you are the type of person who prefers to take 8 losses of $200 each and have 2 winners of $1400 each this might be a better strategy as opposed to using the other side of the range for stop loss.


Here is a tip I'll give out. What type of trader are you? Do you like momentum trades or fades? If you like momentum, use very tight opening ranges. If you are a fader, use much wider opening ranges. You need to fit the ACD levels to your trading personality. This is very important. There is no right or wrong way to do this. What you are trying to do is construct levels and parameters that allow you to read the price action most effectively.



I created a ratio that I use to put on my charts that simply shows the opening range divided by the ATR. That was very helpful. But wide opening ranges give you great fade trades especially into long term trends.


One of the key things about ACD is that it keeps you from over trading. It's actually a very passive approach to markets. I'm not sure it's all that effective is one is trying to be very active in the markets. When you talk about trend changes on such small time frames, it kind of goes against what ACD is built for. ACD is about a general bias. And the idea is the bias should NOT change throughout the day. So Fisher created these A levels as a high hurdle for the market to overcome to reveal the bias


I think most daytraders get chopped up trying to catch every slight move and trend change. Many days ACD tells you not to even bother trading. This is why Fisher recommends following many markets and not just one. If all you follow is the spoos, you will find all sorts of patterns and reasons to jump into trades when crude oil or gold might be offering you a perfect layup.


I'm not saying it can't be done, I've just never seen ACD work well in a high frequency fashion. In fact, as a guy who has been around 1000's of traders over the last 10 years, I think there is a correlation to frequency of trading and failure. Especially in futures. We know that 90% of futures action is noise so we are really trying to capture that 10%. The more you try to catch every turn and every dip and every breakout and every big move, I think you are just sinking in quicksand.



BTW, I know hourly bars don't fall under the category of active trading, just trying to point out that less is more with ACD.



Dont worry about specific levels/times....you need to just understand about the whole concept of ACD....any level can be an A level (but it must be a point in time that someone, buyer or seller, is pushing the market (and getting fills aggresively - they dont care that they are paying up to buy, buying the offer and placing new bids...) , and you combine that info with the "avg volitility"/ATR to see if they are keep coming back to buy or are done buying and the market makes a failed A level...your not trying to identify A ups and downs....your trying to understand what is going on with the T&S - someone comes in and buys (Aup), or he just buys, then stops (failed Aup), or hes buying the first few hours (Aup), then stops and sellers come in (C down - now all those buyers are stuck short)....


There really are no magic levels. As I've said before, ACD is a price action based system. Our levels could be off by 5 or 10 ticks but I'm pretty certain we would be in agreement about the relative strength or weakness of any given product.


I don't think there is any way to dilute the effectiveness of this methodology. Because not everyone will use the same volatility levels or the same opening ranges or trade in the same style.


I tried many times to "teach" ACD to guys in my prop office and it was an utter failure. Which proves that there is no "magic" involved. Trading is hard and it won't turn a bad trader into a superstar. It will simply make a good trader better. But you have to get guys to the good trader level. I think peace in the middle east might be an easier mission.


The follow-on observation is that, if price moves "enough" from the open, the probability of the open being the high or low of the day goes up even more. The "A" levels are rough approximations of "moving enough."


"Day" could also mean "week" or "month." Supposedly this aberration holds true for most timeframes.


Here is another way for you to use ACD. Since this is a price action based system, paying attention every day to the A confirmations is huge. This is where Fisher created the 30 day number line concept.


the purpose of using price action over a rules based system is to spot and locate opportunities in the market that are NOT obvious to everyone else. Static systems are the opposite.


The reason why ACD cannot be a rigid rules based system is because there would have to be an assumption that the input variables are absolutely correct, which we have no idea that they are. Those input variables are the ATR length, the width of the opening range and the A variable. Since these are just "approximations" we cannot take them as absolutes.


So since we know there is some wiggle room in these input variables, we have to accept the fact that they are not always going to be precise and we must use them in a way that gives us some allowance for deviations. By utilizing a price action approach where we are watching several markets and using all the data available to us, we can actually get a much clearer picture of what is happening.


I have often described ACD as lens in which we view the market. We still have to trade and make decisions, but ACD makes those decisions more clear and precise.


Let me say this again, the best trades one finds in the market are usually the ones nobody else sees. ACD gives you the lens to find those trades. The whole world can identify a trend. The whole world can spot new highs and new lows and which products are breaking XYZ moving avg or taking out some critical support or resistance levels. I don't take trades that the whole world is running into. Not because they are not going to work, often times they do. But they will be messy. Stops going off all over the place. I prefer the trades no one is watching or levels that no one is paying attention to. Even better if most people are on the other side of the trade.


To sum up, trading is not easy. Very few people will ever succeed at this. ACD will not make a bad trader into a good one. It will only make a good trader better. There are no magic levels. There are no magical setups. Trading is going to require you to go against the best people in the world and beat them day in and day out every single day. It's going to require more then rules to succeed. It's going to require more then just a "system".


As I've said before, you will find your trading improve greatly when looking for things that don't happen often. Look for the rare trades. The trades no one is talking about. Look for things that don't make sense.


I actually don't like when a product becomes more volatile the normal because more often then not, that means the move is just about over. Volatility is nature's way of bring back normalcy to a product. You want to get in the product before it becomes overly volatile.


Also, just a general recommendation. Please don't add too many other indicators to whatever you are doing. I've never met a profitable trader that uses too many indicators and needs so many confirming indicators. What makes price action is effective is that it's simple. Indicators kill price action because it destroys the purity of it.


Volatility usually means the trade is becoming crowded, over leveraged and the price action is driven by stops. It's very hard to make money in those markets. Usually "daytraders" want volatility because they have a fixed amount of time to exit a position. A swing trader does not. A swing trader wants trend, not volatility. Of course all traders want movement, but not erratic movement.


I remember back when I daytraded in NY for Worldco as a newbie, I would run scans everyday for volatile stocks, because that is where I thought the "action" was. Then one day a guy came up to me and said why are you watching those stocks, the move already happened. Watch these. I said, those stocks look dead, why would I trade them. And his response was, because they are going to move. I asked him, how did he know that? He said, it takes practice, but that is the skill you need to develop. It's not easy, but who said trading was.



Let me put this another way. Volatility produces noise. The more noise, the harder to read price action.



Don't get caught up in precise levels. It's much much much more important that you understand "your" levels and why you chose them. My levels are not better then yours. But I understand my levels forward and backwards seven days a week and twice on Sundays. Remember, ACD is simply a lens in which to understand price action. You and I might wear different shades of sunglasses but if we walk outside and it's raining, we should both agree no?



Too many traders focus on minute details and fail to see the forest through the trees. Just try to focus on price. Think about what is actually happening in the market with regards to price. Leave your personal opinions out of it. I always tell traders, markets are not that complicated they can only go up or down. You have two choices. Most important decisions in life have far more then two choices to make. Remember, trading is easy, very easy, when compared to real decisions you make every day that affect your family, your health or people around you.




I wish trading were that easy. Think about it, if there were a correct level to use, one could easily back test looking for those levels and would find them relatively quickly. You can curve fit anything. Again, this is where traders get lost in the details when they should be keeping their eye on the big picture.


This is exactly why "you" need to construct the levels so you know why it should work or not. You shouldn't trust me. ACD is a canvas. You need to supply the paint and brush to create your own art. My art will look like shit to you.


The point is that, according to your own rules, cattle makes a monthly A up. If it is a good A, so much the better. You then pan in to look for a good place to get long because you know you have price behind your back. ACD from what I can glean is meant to force a trader to trade less and not be countertrend when they do. So it is not what number cattle made a monthly A. Your number is your own. It is that price action caused cattle to meet your monthly A up.


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.


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.



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.


Try this. For weekly values, your OR is the first day of the week. For monthly the OR is the first week of the month. This ain't hard Sam

You are overthinking this.


Let me forewarn you. Mark Fisher in his book talks about using ACD as a casino and I agree with this concept very much. What that means is that you if you SOLELY focus on just one product, you are going to end up forcing yourself to take sub par trades. You really want to trade as many products as possibly and only focus on the best trades. This is just a suggestion. I know how guys fall in love with one product or like to "get to know one product really well". But I think you will find trading much easier if you open yourself up to all markets.


Let me also add that the Euro along with the S&P are two of the worst products to trade because they are so crowded. Stops galore. Very choppy and very messy. Also, automating ACD can be very difficult since it's a price action based methodology.

Currency traders......


Focus on good A thru the pivot. It will help you. 30 percent on my account this week.


I have said this before and I will say it again. Let me be absolutely clear about this. I believe more in this next statement then I do that the sun will rise in the east tomorrow. If you are NOT already a profitable stock trader or a daytrader then no ACD levels will make you one period. I cannot stress this enough.


I have traded a lot of stock in my life. I understand the nuance of stock trading. If you have never been a good stock trader, then slapping opening ranges on your charts with A levels around them is not going to be effective. That's just the way it is. I know there are a lot of guys out there struggling looking for something. And I feel for them. Every trader has been there. But there is no magic with ACD.


there is your trading system right there,hunt for a trend, enter wait for the move, if it doesn't happen lose small. Original quote by William Gann who likely stole it from someone under the button tree.



I think what you need to do is take into consideration what type of trader you are. If you are trading momentum, you want to use tighter opening ranges and smaller A values. Some guys actually use 3 min opening ranges to trade crude oil for example. If you are a mean reversion trader, you sure as hell don't want to sell tight range bound markets, you want wider ranges so wider opening ranges and larger A values.


Then you have to consider the product you are trading. Bonds don't trade the same way as crude oil. Some of these products gap more then others. Bonds for example gap on economic data at 7:30 central time. Oil gaps on the inventory numbers. Grains gap on crop reports. You can't trade corn the same way you trade AAPL. I mean I think this is common sense.


Here is my advice. Before you start getting into too much of the macro stuff, try to master intra-day ACD. It's easier since you are focusing on one time frame. Once you get into the macro stuff you need to watch the daily, weekly, monthly, QTR, etc and that can drive one nuts if you are unsure of what you are doing.


Well, I didn't think you meant using an intra-day A up for a macro signal. I mean using a tight opening range for intra-day A levels and then taking the same percentage and applying it to weekly and monthly levels. Intra-day trading is very different and the opening range and A levels need to address that. Weekly and monthly levels are very different. For example, one might be a momentum trader intra-day but more of a fader over longer term time frames. Or vice Versa. So your opening ranges and A levels need to reflect that.



Let me try to make this simple. ACD is like a nice suit. You want it to fit. You know what your chest size and arm length is. So tailor the suit so it actually "fits" what it is your trying to do. You don't want the suit to be too big or too small. So think about what kind of a trader you are or want to be and make ACD "fit" your style.



ACD is about RISK management. There is no edge in ACD, other than a viable method to control your risk. ACD is about knowing where to get out more than knowing where to get in. Where to get in after a market makes an A is your business. But, when a market makes an A you are not allowed to trade counterbias unless it makes a C. This alone will keep you from being hacked to bits, which is the fate of too many traders. Death by a thousand cuts. ACD eliminates that.


Copper is the building block of every major economy. It's an essential component to cars, houses and buildings. It's a very sensitive metal. When economic growth speeds up, people start hoarding copper because the price can go ballistic vs other items like lumber, steel and chemicals. China has been the growth driver in the world economy for awhile now and they started buying copper with impunity. Some believe they over bought and have up to a 10 year supply of it. It's understood that they own about 50% of the available copper in the world. Now that their economy has slowed, since they are such a big buyer of copper, the demand goes to zero really fast. I doubt they will sell any of their copper supply but if they stop buying the metal and the US stops buying it, then it's going to fall like a rock.


Copper reacts much faster to the economy then something like the S&P 500 which moves like a snail. So if you want to make a more aggressive bet on economic growth or contraction, copper is a much better product. It's also a great tell to confirm price action. In years past, people use to use the Dow transports as a confirming signal to the Dow. I think more and more people are now using copper to confirm strength or weakness in the market.


Something I might add is that the reason Fisher spent a lot of time talking about the significance of the OR is because back then he used that level as his stop. So knowing that those levels were much stronger then random support or resistance levels made the system very robust. However he has stated many times that in today's markets no one uses a stop that wide and therefore the likelihood of price taking out those levels is not as big a concern.


I guess what I'm trying to say is that I would not dwell on the significance of the OR times now.


I think a better study would be to look at the number of times a confirmed A up or confirmed A down closes at or near the highs or lows of the day respectively in order to calculate expectancy. The problem I have with simply testing the robustness of the OR high or low is that one can get killed getting stopped out of trades well inside the OR especially in high volatility markets.


I think what you want to test is "follow through". A while back a buddy of mine tested this on trade station and it was indeed proven that confirmed A trades at the very minimum hit the ATR a majority of the time. This gives you something to work with as you are no longer testing whether or not you will be stopped out but whether or not the trade actually has "follow through" to the ATR.


The other benefit this study has it that it negates the importance of OR time frames since what we are testing is follow through to the ATR, we no longer need to worry whether one uses a 5 min or a 30 min OR as the ATR level should be constant. This keeps things much more clean.


This is really really important. First my usual disclaimer, this is only my opinion. But A levels are NOT to be used as support or resistance levels. That's just not what they are. The fade trade is just that, it's a fade. It's not a fade because there are sellers waiting there, it's a fade because that is the point where volatility is getting over extended.


The way you want to play fade trades is by taking only the FIRST fade. Don't keep selling the market every time it goes up there. In my experience, the fade works best the first time. After that, every time price trades back to that level, it's telling me it wants to go through it. That does NOT mean it's going to confirm and go to the moon, but simply at the very least it's going to run stops.


So the highest percentage trade is that first fade because there are no stops there yet. It's also the only time where price is truly over extended. Once it comes off that level it now has a chance to find real buyers who are going to try to take it higher. I would not want to sell into that.


On the longer term trades, you get less chop and less false breakouts. So when price breaks out, it runs. I think the win rate on confirmed trades longer term is probably closer to 75%. Because you are trading the longer term trend which is more reliable. Daytrading has a lot of noise so you need to account for that.


Yes, the best A trades are the ones that initially fail right at the A level then come back up and go through. you can immediately take that trade and not wait for the confirmation.


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.

I would also try his first hour pivot range. Price should be above the daily pivot range range and within 10% of the first hour high.


I understand what you are saying but at it's core, it's a trend following system and most purists of that style will argue that trend followers should never have a profit target. The only way I think one can come out ahead with a trend following approach is to catch huge winners which are usually very rare. But if you cut those winners short, you may not have enough edge to be net profitable. I'm just providing a counter argument. There have been countless book and studies done on this and they all seem to come to the same conclusion.

 

46-minute video ?!?!
No one is going to watch YouTube anymore.
Because it will take half a day to watch it.

There has been a sudden change in youtube;
Every few seconds, there will be an advertisement !!!

 

What does "ACD" stand for?

1400 (!) pages to explain this ACD Method?
You must be kidding!
This sounds much like BS for brain-amputees...

 

It must be some very old trading thing.

Look at the video. It was probably taken in the 1950s.

 

i see time, i see static inputs, i think pre mesopotamia....

 

MF wrote a book that is pretty short and to the point about this method. This thread is just comprised of actual traders who have adapted ACD to their style so I am just sorting through it as a side project to see what I can find.

 

knew a guy who traded ORB in similar way. But he would flip a trade and double his size on every losing attempt or even day till he finally got one big. sometimes one losing day would wipes away weeks of profit, but he seems to be fine with that. Martingale worked for him all his career because he got rich outside of trading and had nearly unlimited fund to back up this style of trading.

 

Yep...lots of "millionaire traders" who were just savvy businessmen that sold out for big $$$ and now they trade as a hobby in retirement. one of two categories of millionaire traders - the other being former pros that were honed into badasses by OG pros.

 

what amazed me was how he was able to stop trading completely no matter how much he lost after the opening session. I guess this is the money management skill that keep him from blowing up.