Trading research involves a lot of time spent trying to find and evaluate new or interesting techniques and approaches.

Everyone has their own filters that need to be gotten past before a golden nugget is deemed to have been uncovered. These filters get more sophisticated, targeted and refined as experience is gained.

Often times new connections can be made with something that was discarded a long time ago.

The Goji method which I came across not too long ago on the babypips forum places a lot of emphasis on only trading during the opening of a session when liquidity and volatility are generally high.

From the murky depths of my memory rose the ACD method put forward by Mark Fisher in The Logical Trader.

The ACD method is not a trading strategy in its own right, more of a framework upon which you can add your own rules.

It’s core tenant is that the opening range is statistically significant. The easiest way to demonstrate how this is used is with a quick example.

Let’s say we use the opening 15 minutes of the London session on EUR/USD. The high and low prices achieved during those 15 minutes form the opening range.

The A high is calculated as being a certain number of pips above the opening range, and an A low is calculated the same number of pips below the range bottom.

The exact calculation of the number of pips is not stated in the book, but Mark Fisher in presentations has often used Average True Range (ATR) calculations as part of the process.

One common calculation is to use 10% of the 10 day ATR. You can quite happily change either of those figures to suit, such as using a 30 day ATR instead.

So with a 10% of ATR(10) calculated it is possible to plot where the A high and A low are.

If price moves up to the A high (or down to the A low) and stays there for a period of time exceeding at least half of the opening range time, then an A high (or A low) is said to be active. This signals directionality in the market and then feeds into other rules you might have whereupon you would only take long trades if the A high is triggered, or shorts if it is the A low triggered.

The stop loss placement for any such trade would be the opposite side of the opening range (labelled the B point).

Only one A point can be triggered per session. Thus if an A high is active then the A low is no longer a possibility. They are effectively like OCO (One Cancels Other) price points.

One an A point has been activated, it is possible to calculate the C point.

The C point is placed on the opposite side of the opening range to that of the active A point.

The distance of the C point from the opening rage is another magic number which is often seen as 15% of the ATR for forex pairs. If an A is active above the opening range then a C point is calculated and placed below the opening range.

If price retraces back through the opening range and continues through it, the C point will become active once price touches it. Once point C is touched, only short entries should be considered and traded depending on what other rules you have in place.

Point D is the opposite side of the opening range, exactly how point B is for when A is active, and is used as a maximum stop loss point for any trades taken once C is active.

There are layers of other stuff added on top of this framework, from pivot points to considering what happened exactly 30 days ago, but you’ll have to read the book to see what they offer.

Just remembering about the calculation and placement was enough to draw me back to investigating it once more.

The time element, waiting for price to hold a certain level at point A before confirmation is given, is especially interesting. Time considerations are preying on my mind much more.

There’s always the fun question of what exactly is the opening time period for a 24/5 global currency market. Mark Fisher is perfectly happy to use the opening time for the local currency. For example, trading EUR/USD or GBP/USD you are probably best off using the opening of the London session. For AUD/USD or USD/JPY use the Asian session’s open.

There seems to have definitely been a statistical edge in using the opening range on energy markets 10, 15 or 20 years ago like Mark Fisher used to trade his way to success.

Futures markets are basically 24/5 nowadays, just like the currency markets and I think it is only natural to assume that the statistical significance of the opening of the local markets has to have diminished somewhat.