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Kiwi

Market Wizard
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  1. Haha
    Kiwi got a reaction from Soultrader in Woodies CCI technique.   
    Lets get real. The CCI does provide the basis for working trading if its used properly.
     
    First: what is required?
     
    People trade with the trend or countertrend. Lets say that trading with the trend is easier (longer moves, and more forgiving because if you get your exit timing wrong the retracement frequently won't reach your stop before the move continues, although obviously a trend will finish or do a larger timescale retracement at some time).
     
    When you trade with the trend you either hang on trailing stops or you exit at targets that (for most people and strategies) should be at least twice as big as your planned losses.
     
    So, can Woodies' use of the CCI help with this?
     
    Yes.
     
    Its a trend following indicator (its just the current price minus a CCI length simple moving average divided by a normalizing factor (so that reaching 200 is similar to reaching the 2sd bollinger band ... similar)).
     
    If you wait until its above zero for a while then the chance is you have an up trend. If you wait for a pullback to zero or a little below you have a pullback of sufficient magnitude to feed liquidity into continuation. So you buy. Then you have to exit. How? When it hits the 2sd bollinger (200cci) or when it pulls back from that perhaps?
     
    etc etc
     
     
    So basically Woodie has taken standard reasons for entering and exiting a trade and framed them around a 14sma and 6sma based indicator. They can work. Do most people succeed with them? No. Do most people succeed with any trading method? No. Is it the best method? No. Most would do far better understanding trend, support and resistance, and price action (and where it and volume action are relevant) than messing with the cci. But is it that wcci doesn't work? No.
     
     
    So what has to change? Study price based methods and yourself. In simplicity and understanding lies the holy grail.
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