The ACD Method
The premise of his system is based on the daily opening trading ranges and pivot ranges for commodities or stocks. When a market breaks a pre-determined level above or below the days opening range, you will take a position in that direction. Your stop-loss will then be placed at the other end of the opening range.
The pivot range is used to find areas of support and resistance. The calculations for the pivots are clearly explained in the book. You can use the pivots as areas to buy at support levels or sell at resistance levels. However, the underlying theory states that breakouts of pivot ranges are likely to continue in that direction.
More Components of the ACD Methods
Fisher does stress that you need to be consistent when using the system. Trade the same timeframes, cut your losses short, don’t risk too much on any trade and over time, you’ll be successful.
You also have to use some judgment when trading the system. It was meant for volatile markets that are trending. If you get caught in a market that gets stuck in a range, you can reverse the system. Instead of following the breakout levels, you can fade them.
A Trading System and an Understanding of Trading
New traders may be a bit lost when reading the book and it might take several reads and studying to fully comprehend what Fisher is saying. He does not give a good summary of the whole plan, but he spreads it throughout the book. Therefore, I suggest taking notes and writing your own summary of the trading methods. From there, take the pieces that best suit your trading style.
The most important aspect of this book is that you need to trade with a disciplined approach. The ACD Method gives you trade entries, rigid places for to put your stop losses and you trade with the trends. That alone greatly increases you chances for success.