The ACD Q & A

Below you’ll find descriptions of Logical Trader’s ACD Daily reports; click on the links for illustrations of exactly what the report looks like. Immediately below are the most frequently asked questions from new ACD subscribers. For even more comprehensive insight to ACD, visit the Glossary section!

Commodity Pivot Tracker 
A trading tool that assists in forecasting an increase in short-term market volatility. 

Commodity/Stock #Line Sheet 
The "fitness test" of a market. Provides a numerical analysis of the past 30 trading days to determine it's overall health (strength or weakness). 

ACD Methodology - Triangle Sheets 
Presents a visual "ACD" picture that assists the trader in establishing a macro and micro bias with well-defined points of reference. 

Commodity/Stock Pivot Sheets 
Includes vital information such as high, low, close and pivot ranges. 

Stocks Change In Trend 
Proprietary program highlighting high probability "change in trend" dates for the current calendar month. Based on 15 years of historical data, it helps identify changes in both macro and micro trends. 

Commodity 'A' and 'C' Values 
Lists the 'A' and 'C' values, as well as the length of the opening range for each commodity. 

Energy Market Commentary 
A logical approach to today's energy trading based on a summary of prior market activity. 

Commodities-First Trading Day Of The Month 
Highlights the high, low, close and pivot range from the first open outcry session of the month. This first trading session establishes a macro bias as well as a point of reference to be used during the remainder of the month. 

Natural Gas And Crude Oil Spread Sheets 
A scorecard for the intraday movement of the first eight spreads. 

Coffee, Sugar, Cotton and Cocoa Spread Sheets 
A scorecard for the intraday movement of the first eight spreads. 

Commodities And Stocks - First Two Weeks Of The Year 
Very similar to the First Trading Day Of The Month item (see above). This ACD tool uses the high, low, close of the first two weeks of the year as well as the high, low, close of the first two weeks of July to establish pivot trading ranges for both the first and second halves of the year. These two-week pivot ranges provide the trader with early insight into future market direction for both stocks and commodities. 

Most commonly asked questions:

Q. Can the “ACD Method” be applied to stock or commodity xyz?
A. As long as there is sufficient liquidity and sufficient volatility “ACD” can be applied to virtually any stock or commodity.

Q. How can I get the A-C value for a stock that is not listed in the ACD stock reports? 
A. A good approximation of the current “a” value for any stock would be to take the 30 day avg. range (h-l) and use 20-25% of this value. 

Q. What prices are used in calculating the pivot range?
A. A pivot range is based upon the high,, low and close of a specific trading period. (for day traders, this would be the previous trading day.)

Q. How is the pivot range calculated?
A. Calculate the daily pivot range using the following formula:

Q. What is the significance of the Number Line Sheet?
A. The main purpose of the number line is to identify a potentially developing trend. When the 30 trading day cumulative tally goes from a base of 0 to reach +/- 9 on two consecutive trading days, it becomes significant.

Q. Can I create a “pivot moving average” indicator in my charting software?
A. Although, all charting software packages are different, almost all come with the capability to plot moving averages. The problem arises in that the default in most packages creates moving averages based on “closing” prices. 

The “pivot moving average” is calculated using the pivot (vs.) the closing price. Therefore, if your charting software allows you to change the price component of the moving average from close to (h+l+c)/ 3 you will be able to plot the pivot moving average indicator.

Q. What is a “Pivot on Gap Day” that is referred to on some of the ACD information sheets?
A. When the market gaps open, above or below the daily pivot range and never trades into the daily pivot range from that day, a Pivot on Gap Day has been established. That Pivot on Gap Day becomes critical support or resistance for future trading sessions.

Q. What is a sushi roll?
A. In the ACD system, sushi roll is the name given to a particular early-warning indicator of a change in market direction. The sushi roll utilizes five (5) rolling trading days (or for a shorter-term perspective, five 10-minute bars). The sushi roll compares the latest five increments of time to the prior five increments of time to determine if the market is changing direction.

Q. What should I do if “this” or “that” scenario occurs?
A. Regardless of the scenario, the answer always remains the same: 

The ACD methodology should be adapted to suit your own trading styles and parameters. Therefore, it should be incorporated into your trading to help you plan out and execute your trading strategies. 

For example, where Trader 1 may be trading breakouts, Trader 2 may be better suited fading failed breakouts. Obviously their entry and exits would be quite different. However, neither would be “wrong”. 

The following 5 ACD rules should greatly improve your trading:
1. Plot point A’s and C’s as points of reference.
2. Lean against these reference points as you execute your trades.
3. Maximize your size when the trading scenario is favorable. At all times, minimize your risk. 
4. Know where you are getting out if you’re wrong.
5. If you can answer 4, you will trade with confidence.