Has anybody ever seen a purely automated CCI-based trading system perform successfully? I wonder if CCI rules can be used solely on mechanical basis (without traders "discretion/judgement")?
Here is a "Woodie-approved" CCI system link. According to this article, Woodie basically overlays a CCI 14 over a CCI 6. He then has a variety of entry and exits based upon the CCI formations, and completely ignores actual prices on the chart. IMO, CCI approaches seem to give many whipsaws, but might work OK if you enter/exit long trades under "oversold" conditions using longer time frame(daily/weekly), rather than minutes. http://www.trading-naked.com/woodie1ccisystem.htm
Woodies chat room and followers exhibit a cult-like quality. However, I guess he deserves some credit for providing a free service. (I would like to see actual audited performance from his system). Still, it does not appear to be a purely mechanical CCI strategy.
I just spent some time going through the woodies cci methodology. Despite the trading naked site saying the rules are hard and fast and no deviation is required, there are so many different rules and nuances it would be considerably difficult to program. I've never heard of a cci performance report from ts. To extrapolate I would say when there is a long enough trend, the trend traders win, and if the counter trend moves far enough for those trading ct, they will win. In between are all the losing trades, just like all trading.
There is no system to audit. Nor, last time I looked is there anything rigorous enough to be called a trading plan and tested. What Woodies group gives is a bunch of possible entries and exits for you to choose from and create your plan. As with most other possible strategies in trading I am pretty certain that most do not succeed. This is not necessarily Woodies fault. PS. Although Jeff say's it a complete system he was always inclined to make grandiose statements. He disappeared a few weeks after he finished the document at NQoos site. Perhaps the traders wetsquad took him out for revealing too much of the truth.
I would say most likely no....in all my years of trading I only know one guy that can make consistent profits with the CCI.....non-automated (and I can be sure he would tell me that as a stand alone indicator that would be highly improbable).
Seems like you always get bad whipsaws with mechanical CCI rules. Just try to backtest the basic rules: Whether the CCI is attached to a Daily Chart, a Weekly Chart or a 5-Minute Chart, it is usually used by traders in the following ways: 1) A cross below the +100 Line indicates a change in trend from up to down. 2) A cross below the 0 Line indicates more downside to come. 3) A cross above the -100 Line indicates a change in trend from down to up. 4) A cross above the 0 Line indicates more upside to come. 5) A CCI of +250 and higher is an extreme reading. The price of the QQQQ ordinarily pulls back to some degree when the CCI rises that high. 6) A CCI of -250 and lower is also an extreme reading. The price of the QQQQ ordinarily bounces to some degree when the CCI falls that low. 7) The CCI also displays "negative divergences". A "negative divergence" is when the price of the QQQQ prints a new high, but the CCI does not. It's often a warning that a rally is living on borrowed time. 8) The CCI displays "positive divergences", too. A "positive divergence" is then the price of the QQQQ prints a new low, but the CCI does not. It's often an indication that the bottom has either been established or is near. Comment on your backtested findings here at this thread.
I have a complety automated system using ONLY cci that is profitable on the ES going back past 6 years...... however the way I use the cci in it, is not how you would typically use the cci.... complety out the box, but it actually works.. the system performance goes WAY up with using another indicator in conjunction with that system..... but the pure cci system is profitable.... The one thing I have learned through automated systems is your ENTRY is not what determans if your system will be profitable... its your exit... Good entry helps make your so so exit work, but the exit is where the money is...