Top 5 ACD Trading Tips

Tip #1 - Trade only market that are moving directionally

You just finished reading the ACD Methodology book and are eager to start trading with what you just learned.  Stop!  You cannot arbitrarily apply ACD Method to any markets and expect to be profitable.  You must filter out which market to trade.  You want to select markets that are in the state of imbalance.  Signs of an imbalanced market are that it tends to close near its high or low of the day.  There is a wide disagreement between buyers and sellers on what it is worth.  You hear traders saying things like "I can't believe people are buying this", "This is overbought", and "This is a bubble".

Tip #2 - Put the chapters on Opening Range in storage

It would be better if you start to learn to trade ACD Method by reading the book backwards.  Start trading with the methods in the back of the book such as trading Good News/Bad Action and work your way to the front of the book.

Even though the book starts out with chapters on Opening Range, it should be the last ACD Method you should attempt to trade.  Do not implement the Opening Range trades when you first start out.  Save it for later after you have gained enough understanding of how ACD Method works.  Starting too soon with the Opening Range is a common mistake.  Don't fall into the mistake of oversimplifying it and using the high of the Opening Range as a trigger price to buy or the low of the Opening Range as a trigger price to short sell.  Do not use the Opening Range as an entry price; use it as a bias sentiment instead.  Use the Opening Range price action to ask yourself questions like what is the bias for today?  Is it a bullish bias or a bearish bias?  It takes screen time to absorb and interpret the price action of the Opening Range.

Tip #3 - Opening Range is not static

The Opening Range is not a static time based interval.  It is a dynamic time interval and it can move around.  The Opening Range needs to coincide with the day's trading activities.  For example, if your normal opening range starts at 9:30am ET, you must adjust it to start at 8:30am ET on the first Friday of each month when the Unemployment Report comes out.   The Opening Range can be moved to an earlier time like on the days of the Unemployment Report or it can be move to a later time such as FOMC Meeting Days.  The Opening Range starts at 2:15pm ET on FOMC days.  The trading activities must confirm the timing of the Opening Range.

Tip #4 - Use Support/Resistance Levels as Number Line

Use the accumulation of Support Levels or Resistance Levels as a number line.  You want to be involved in markets that are in the state of imbalance.  If it continues going up, then the number of Support Levels will keep increasing.  The number of Support Levels will be more than the number of Resistance Levels.  If it is to continue with its upward strength, it will not pullback to test its support levels.  It will just keep going up to take out resistance levels.  The more support levels you accumulate, the stronger is the strength of the up move.  You know the bias of the market.  You also know where you are wrong (i.e., if it pulls back to test its previous support level).

Tip #5 - Best Risk/Reward trades are trades that are unexpected

When everyone are positioned one way and the unexpected happens, then this is the best risk/reward situation.  You will be risking little in comparison to the reward.  The initial move will be fast and the magnitude of the move will be further than expectation.  You will hear Wall Street quants saying "This is a 25 standard deviation event", and "Things like this are only supposed to happen about once in every 100,000 years".  They are caught flat footed and are not prepared to act or they are in denial.



online stocks, futures, and currency trading strategies

Stay In Touch

Follow Clever_TS on Twitter

If you like this page and you are feeling generous, please give credit for the source with a link back to this page.  Help others find the valuable resource available here.

[an error occurred while processing this directive]