INTRODUCTION

TO

TRADING METHOD

Ronald N Artos
 Know your ACD:
● Plotting your ACD trade
● Determine your Exits and Targets
● Average Daily Range
● Central Pivot Range
● CPR Width Analysis
● Market Days and Pivot Range Relationship
● Long term Bias based on ACD

Additional Topics:
● Correlation Ring
● Market Structure (Support and Resistance)
● Market Structure (Supply and Demand)
● Recovery and Cover Techniques
● Example Trades

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Know your ACDs

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What is ACD Method?

A logical approach to trading that provides traders with low-risk high-

reward trading scenarios. This approach can be implemented both
in micro and macro time frames.

A method developed by Mark Fisher, he pertains ACD as the “pulse”

of the market. He's still using the same methodology since 20 years
ago.

The method can be adapted to various trading system trader's

preferred.

The basics of ACD is to plot defined price points in relation to the

opening range.

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Who is Mark Fisher?

Mark Fisher's passion for trading began at a very early age. At the
age of 12, he landed his first job as a runner on the floor of
Commodity Exchange. While attending University of Pennsylvania’s
Wharton School of Business, Mark Fisher moonlighted as an
independent member of New York’s COMEX. At the age of twenty-
one, he was the youngest ever to trade in the silver futures pit.

While attending college, Mark started researching ways to improve

his trading. Combining the ideas from his academic research and his
real world trading experience, Mark Fisher developed the principals
for his ACD Methodology.

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Trading Sessions

Opens Closes
Forex Market Center Time Zone
Asia/Manila Asia/Manila

Frankfurt, Germany Europe/Berlin 03:00:00 PM 11:00:00 PM

London, Great Britain Europe/London 04:00:00 PM 12:00:00 AM

New York, USA America/New_York 08:00:00 PM 04:00:00 AM

Chicago, USA America/New_York 09:00:00 PM 05:00:00 AM

Sydney, Austrailia Australia/Sydney 05:00:00 AM 01:00:00 PM

Tokyo, Japan Asia/Tokyo 07:00:00 AM 03:00:00 PM

Though London session starts at one hour later than the Frankfurt
session, combining the whole European session into one makes it
better plotting your ACD.

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Trading Sessions

I've created an indicator for MetaTrader 4 I called “marketsession”, which based from
“markettimes”, as I've seen Dennis Sherman is using. The indicator shows the opening
and closing of each session. To properly configure the indicator, first you need to be
familiarized to your broker's server schedule and time zone.

Using a web tool called “WorldTimeBuddy” (www.worldtimebuddy.com/forex-hours)

can help you configure “marketsession” easily.

Marketsession indicator will be displayed together with RSI

indicator as support tool for your analysis.

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The Auction Process

The purpose of the marketplace is to facilitate trade: it simply means

that as the price moves up, it brings in more buying or, as the price
moves down, it brings in more selling. In other words, the market
auctions up until there are no more buyers. Then it reverses and
moves down until there are no more sellers. All market activity occurs
within this broad framework – with the market moving up to cut off
buyers, and down to cut off sellers. In other words, the market begins
to move directionally and advertises for an opposite response to cut
off the directional move.

The concept of “advertising” is very important to understand the

natural dynamic of the marketplace and to introduce the concept of
value. Buyers and Sellers both look for value, and in order to do that,
they keep on exploring opportunities up and down.

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The Overnight Range

Overnight Range is not a core part of ACD method, but as a factor

incorporated by Dennis Sherman that can be useful with ACD
setups. Understanding overnight range we need to have a
background first on the auction process

The Overnight Range is simply the New York Auction Close range to
the Open of Tokyo. If we print the High and low of those two points
you have already identified Value as they are significant support and
resistance areas that the market will watch and play out the
remaining of the day.

Having knowledge of overnight range will give you basis or hint what
might market will offer for the current trading session. How they've
advertise trading opportunities.

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The Overnight Range

In this example USD/JPY on M15 minutes chart. Overnight

range is the highest and lowest point of the price range
between New York close and Tokyo open.

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The Initial Balance (opening range)

ACD starts with the concept of the opening range or initial balance. The
Initial Balance is the initial time frame of trading for a stock, commodity,
currency, bond or other financial derivatives at the start of each new trading
session. So we could have 3 initial balance if trade crosses from Tokyo,
London, and New York sessions.

As Fisher's suggest, defining IB (I will refer opening range or initial

balance to just IB from this point forward) will depend on what market will you
trade to, which are as follows:

● Stocks = 20 minutes
● Commodities = 5 to 30 minutes
● Currencies = 5 to 60 minutes
The opening range is the statistically significant part of the
trading day, marking the high or low for the day (in volatile
markets) about 20% of the time.

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The Initial Balance (opening range)

USD/JPY M15 Chart, define IB as the first 15 minutes

candle upon the start of Tokyo session.

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A Point (Getting possible bias)

Now that we have defined Initial Balance, what are we gonna do with that
information? As ACD has been designed a trading model based on breakouts,
the initial to movement outside the IB is called “A Points”.

A-points, with the basis that when breakout from IB premise occurs, the
market is likely to continue in that direction. Fisher gave a hint how to
measure this movement which will define the bias that we'll look for as the
market moves.

For Intraday trades, it is suggested to measure A points with 7 pips movement

outside IB. Can be used on time frame from 5 minutes to 1 hour. Direction of
market will then be based upon.

A-up, when market moves 7 pips above IBH, which suggest bullish market
A-down, when movement of 7 pips below IBL occurs, bearish bias.

Also take note you can only have one A-point per market
session, you can have three (3) per day (Tokyo, London, and
New York)

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A Point (Defining the range)

Defining A point range after IB gives you a head-start of getting

possible entry points and also defines you possible exit points, as
suggested 7 pips away from IBH and IBL

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A Point (Confirmation)

After defining the A point range, next is a waiting game, you need to wait for the next
market movement until you hit a confirm A-point, as the example below, after the
movement below IBL occurs, Third M15 candles then touches and broke A-down
range after a defined IB, hence we confirm an A-down, from there forward we will
look for short trade, because the market appears to be bearish.

Drawing Triangle might help a lot in reminding you from time to time what trade are
you looking for that specific pairs.

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Gap and Fade (Entering Position)

Gap and Fade entry method after a

confirmed A-point essentially gives
the best possible trade position.

As we defined A-down with a

triangle, from there forward another
waiting game occurs, we have to
wait if the gap-down will fade again
and might touch the initial balance.
If it does hence we got our best
entry.

If case it doesn't meet our expected

fade, then we rate market
movement occurs and decide level
or our entry.

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Gap and Fade (Entering Position)

Rating our possible entry helps us defining how much risk are we willing to
sacrifice on that possible trade. I rate them as Good, Better, and Best.

Good entries are the range of A point from the tip to the price before IB.

Better entries are from IBL and within initial balance itself.

Best is from IBH up to ORH, as we see from the example, we are on A-

down. If trading a long position it will be the other side around.

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The Exits (B and D points)

B and D points are essentially the possible exit points when things goes wrong.

B-Point is the opposite A point range when the other one triggered, example
when A-up has been developed, then the A-down range will now become B-point,
or when A-down has been triggered, then the opposite, A-up range will now
become your B-point.

D-point on the other hand, is when B-point has been breached, hence form an
opposite C-point, which then the previous A-point will then become the D point,
as it will serve as the exit point for the opposite C-point trade entries.

D-point range can also be used if example A-point made a successful entry and
opposite C-point didn't occur, the D-point range, which most of the time equals to
overnight range height can be used as target for A-point or C-point successful
entries. Details are discussed in “The Targets”.

Decide on which rated entries is also a factor to consider in defining your exits, in
case you entered in a “Good” entry, then you need to adjust your B-point on the
range as previously defined plus 20% of overnight range.

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The Exits (B and D points)

EURUSD A-up developed during Tokyo session, hence the A-down

range can now be treated as B-point, your possible exit point when
things goes wrong.

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Gauging the Market (C Point)

Once an A has been made, the next possible entry point (after the A point) is C-Point.

C- point are calculated (just like As) based upon a certain number of pips above or below
the opening range. C-point is the crossover point at which your bias shifts from bullish to
bearish, or vice versa. The stop position for point C is the same as the stop position with
Point A – it’s the point that coincides with the opening range opposite.

Point C can be the opposite direction of Point A (as standard), or can be a gauging tool to
exceed you trade to your expected target.

Note that you can setup C-point only after A-point has been established. Example is you
cannot plot C-down unless A-up has been materialized, or C-up unless A-down has been
initially established. Even with advancing C-points, you can only setup C-up once A-up
has been sets and vice versa.

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Gauging the Market (C Point)

C-point can be used to gauge your current trade, example with this
EURUSD M15 Chart, A-up has been established, and an entry has been
made. Plotting an Advancing C-up can be handy to gauge you trade and
eventually exceed to your first defined target. An example of a successful
A-up + C-up.
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Gauging the Market (C Point)

AUDUSD M15, A-up with failed Advancing C-up, then C-down

established and continues the trend. This example shows how to
use advancing C points in estimating a reversal from cancellation
of long position and consider a short position once C-down
established.

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C Point (Reversals)

USDCAD M15, even with a clean A-down has been established, but fade
breaks through IBH and forms an opposite C-point which became the main
trend of the day. Also as indicated A-down and B-point setup, which shifted
to C-up with D-point exit.

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Target Range (Alternative D-point)

Combining OR and IB, together with A-point and C-point ranges forms the
target range which can be used as high probability take profit setup, also
be treated as D-point target range.

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Target Range (Ascending Targets)

C-point can also varies your target as the market moves and measured.
Stacking D-point target range in ascending order will prepare you ahead of
possible take profit target zones. In the chart above EURUSD initial setup to
First Target Range, but when an advancing C-up established, you can use it
as your basis to adjust the target to second target range which is also based
on alternative D-point range.
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Time Factors

Fisher's emphasized on “The Logical Trader” about time factor. That it is insufficient
for a security just to reach a certain price. It needs to remain at that price or a certain
amount of time.

As you plot your trades based on A(up/down) or C(up/Down), there is another concept
to keep in mind: Time.

Let's make on example you are entered long based on A-up setup, you also have
measured your risk based on B-point, and target has been determined. But the
market spent half or same duration with the standard opening range time, let's say 30
minutes for currency trading. If the market doesn't go anywhere from A-point or initial
balance and it equivalent to 30 minutes or as defined initial balance. Fisher suggest
to get out from that trade, and focus on next C-point that will be established.

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Amplifying your Position

When ACD setups goes your way, it suggest to amplify your position and take
advantage of the market. There are various factors we still need to discuss
regarding when to amplify your trade but with what we have discussed so far here
are some list of criteria that is good time amplifying your position.

● A-up + C-up = Strong Bullish

● A-down + C-down = Strong Bearish

Also note that advancing C-point can be determined multiple times, as long the
trend serves them, you can gauge and adjust your targets. Also take note of market
structures which we will discuss later. Support & Resistance zoning and Supply &
Demand.

Harmonic Structures is still new to me and must learn it first to be able to

incorporate it to the ACD method and stuff included in this guide.

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Failed Points

Establishing a short position on a failed A up or a long position on a failed A down

offers the potential to make a profit that far outweighs the risk. A rubber band trade is
made when the market approaches or just touches target A and snaps back. In that
instance, you would go short just below the A up or go long just above the A down.
Your stop on the trade would be A up/down point. Or, you’d exit the trade if the market
didn’t move in the direction you anticipated with your time frame.

● Failed A-up + C-down = Bearish

● Failed A-down + C-up = Bullish
● A-up + failed C-up = minor bearish to bearish
● A-down + failed C-down = minor bullish to bullish

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Failed Points

USDCAD M15, an example of failed A-down and C-up, the market

cleanly defines A-down but the fade breaks through IB and forms C-up
and continues the trend for the rest of the day.

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Average Daily Range

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What is ADR?

The ADR or Average Daily Range is a powerful tool to measure targets and
reversal points. The ADR simply measures the average range of the pair for a
selected Period.

ADR is useful to pick reversals on pivot levels and to take of profits on winning
trades. An extended ADR is a higher probability entry if you combine it with pivot
width forecasting.

ADR is also a key tool to measure the exact A-point and C-point for your Intraday
trades. As standard measurement for A-point and C-point, which is 7 or 8 pips, this
will varies on how volatile the market has gone for couple of days.

ADR can be used to adjust the standard measurement to have more accurate
measurements of these two types of points. Taking 10% of ADR(10) as your A-
point, and 15% from ADR(10) as your C-point.

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Targets with ADR

ADR can be used as your daily target range, you can check ADR
daily value, as the example AUDCAD M15, current ADR value is
667 points or 66.7 pips, it means the total height from ADR high
and ADR low is 66.7 pips. From that information, you will gain
knowledge in advance about the upcoming market movement.
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Targets with ADR

Another Example EURUSD M15, Day has low ADR value and
range, ADR Value = 75.4, that's the ADR high and low of line of the
day, ADR Today's Range = 96.7, actual is 96.0 pips.

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ADR and ACD

NZDUSD M15, Plotting the A-point range for current day is 9 pips and
13 pips for C-point range. Using ADR value on ACD range can serve to
accurately plot A-point and C-point range.

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Central Pivot Range

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What is CPR?

Mark Fisher calls it as the meat of the market. CPR or Central Pivot Range will help you
see key levels of the market where you can find support or encounter possible resistance.
CPR is mainly based on the previous period's high, low and close prices. Just like
opening range of initial balance, CPR is significant factor in analyzing intraday market
movement.

As initially mention CPR is where the market likely find support or meet resistance. If it
manages to break through that range, the market would likely make a significant move in
that direction.

Daily Pivot Price = (High + Low + Close)/ 3

Second Calculation = (High + Low) / 2
Daily Pivot Differential = (DPP – SC)

Daily Pivot Range High = DPR + DPD

Daily Pivot Range Low = DPR - DPD

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What is CPR?

While Fisher only uses the outermost boundaries of the range or the Pivot Range High
and Pivot Range Low, I prefer to include the central pivot point to add another dimension
to the indicator. Floor pivot as also used by Frank Ochoa, author of Pivot Boss has the
formula for central pivot range below:

TC = (Pivot – BC) + Pivot

Pivot = (High + Low + Close)/3
BC = (High + Low)/2

Comparing it to Fisher's pivot range, it plot on same price area, only adds the central
pivot which carries more level to the market movement. TC or Top control is Fisher's pivot
plus range, and BC or bottom control is pivot minus range.

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Gauging Market Sentiment with CPR

Having the CPR information based on yesterday details. We can now gauge the
underlying tone or sentiment of the market as the day moves ahead. If previous close is
above today's CPR, that would be considered bullish, else if below today's CPR, then it
would be considered bearish.

CPR also act as the walls, if the current price is below the range, it acts
as resistance, if above then act as support.

In case the walls has been breach or market breaks through the CPR, we
could expect a significant move in that direction.

The example above shows the day starts the price below CPR and it acts
as resistance and bounce off the market further below.

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Pivot Trend Analysis

Moving out from Mark Fisher's pivot range and

now uses more of Frank Ochoa's pivot boss.
Though it is still identical on how Fisher uses
pivot ranges, Ochoa's method is far much
easier to implement together with ACD method.

Pivot Trend Analysis forces you to become

disciplined to the trend by only buying in an
uptrend, and selling in a downtrend. Seeking
favorable A-point or C-point signals.

As stated before, when opening price of the day

is above the CPR it indicates bullish trend and
we need to see at least if bounces off the CPR
and continues uptrend.

If the price is below the CPR and holds the

prices to the point it push it lower as it indicates
bearish sentiment and continues further.

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Pivot Width Analysis

Both Fisher and Ochoa uses pivot range to forecast potential price behavior using the
width of the CPR.

Trading day that has unusual wide pivot range forecast sideways movement for that day,
while narrow CPR forecast breakout and large movement and creates a trending
behavior.

While normal width of CPR usually a sign of trend continuation, which normally gap and
fade usually occurs.

Adding a little fundamental analysis can help you further. Example, a narrow CPR on
the day of NFP event gives you information ahead and with help of ACD can determine
the intraday bias which amplify your success in trading.

While having a wide CPR can inform you a possible sideway market behavior and saves
you from potential risk if using strict stop loss or advice not to trade at all on that day.

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Pivot Width Analysis

USDCAD, H1 an example of narrow CPR which indicates a breakout and

possible larger price range, and next day has wider CPR which indicates
sideway market movement.

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Pivot Width Analysis

USDCAD, H1 another example of narrow CPR with huge price range,

then next day with unusual wide CPR that market bounces off and
continues the trend several days ahead.

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Pivot Relationship Analysis

Pivot Relationships allow you to gauge market strength and anticipate potential price
behavior.

Going back to the basic of CPR, the importance of TC BC around the central pivot range
is that it plots the width and allows you to analyze 2 day relationships, hence give you a
better view of the trend. Combining Pivot Trend Analysis, Pivot Width Analysis and Pivot
Range Relationship Analysis will:

● Helps you gauge market strength/weakness

● Helps you anticipate potential price behavior
● Allows you to focus on the best trading opportunities
● Keeps you disciplined
● Useful for planning your trades

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Pivot Relationship Analysis

The value area is important because it represents where 70 percent of the trading activity
occurred in a day. The market identified this area as a zone for fair trade facilitation
between buyers and sellers; therefore, most of the day's trades occurred within this
range. The ability to understand the relationships between current and prior value areas is
extremely important market-generated information.

Knowing the type of value area relationship the market is currently operating from allows
you to gauge current market strength and prepare for specific types of setups during the
day.

There are seven types of value area relationships that should be considered when
analyzing the current strength and attempted direction of the market:

● Higher Value
● Overlapping Higher Value
● Lower Value
● Overlapping Lower Value
● Unchanged Value
● Outside Value
● Inside Value

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Pivot Relationship Analysis

Higher Value

Higher Value relationship occurs when the current day's value area or CPR is completely
higher than the prior day's value area. The BC or bottom control of today's CPR is higher
than yesterday TC or Top control. This indicates bullish momentum of the market.

USDCAD, H1 an example of higher value relationship. See the

distribution in which value came higher than the previous day.

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Pivot Relationship Analysis

If you further analyze the previous chart, you will see how the initial balance and CPR
interacts. A good scenario for taking long position is when initial balance is above the
current CPR and in higher value relationship.

However, if price had opened the day below the bottom control or BC, a completely
different outcome would have occurred. Normally it is a scenario of acceptance and
rejection, in which a price level has strong resistance near the current price.

Also there are some cases that the higher value has good distribution setup, but the
prices drops down. Always gauge the market together with ACD initial balance, which
serves as double confirmation method to plan ahead the day.

GBPAUD M15, though it seems

like a good higher value scenario,
but if you analyze it further, the
last day distribution is going down,
and initial balance is below the
current CPR.

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Pivot Relationship Analysis

Overlapping Higher Value

This type of relationship occurs when the current day's value area is higher than the prior
day's value area, but today's value area low is lower than yesterday's value area high.
This is a moderately bullish scenario.

This type of value area relationship when market goes sideways on the
Previous day, and a possible trend continuation or a potential shift.

GBPJPY M15, here's an example of overlapping higher value.

Though TC is higher than previous TC, but the BC is lower than
previous TC.

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