Look at the indicator line of the chart I have posted. Now, post me a CCI that is as smooth and free flowing over the same time period. The CCI is ok, but way too noisy for my liking.
Kiwi, still waiting for an explanation. I know everyone is different, I'm the poster child of different but please explain how eliminating the variable nature of the price bar is a bad thing.
I'll have a go at both of the last two PL. 1) On the cci, it really is one of the noisiest indicators because the closing price is part of its equation ((close-sma)/normalizing factor). But, if you find the right time/tick/vol frame its divergences can be useful and because its price based they show up much faster than a smoothed indicator (stoch, macd, ergodic). The normalizing factor is a key part of the divergence but not responsible for its speed of display (I have rewritten cci with different normalizing factors and despite the indicator's originator having a different use intended for it I find his original factor to be best). 2) I didn't say it was a bad thing ... just one of a choice of things. I use time based bars because I have found that the bar break is meaningful to a lot of other traders ... so watching it and responding to it is a key part of my trading. I also use a much faster tick chart (vol just isn't so good in hsi) to count pulses within the swing I see on the minute chart. So, its not a bad thing - its just not the only thing
1) Nice explanation, thank you. I've rewritten the ergodic as well so I can understand the specifics of indicator use. I use divergences and convergences a lot as well but treat them a wee bit different. I treat them as warning signals, some stronger than others and not as definitive trading signals because they aren't consistent enough for me. 2) I couldn't agree more. I look at trading methods as different types of music. We all have different tastes and those tastes even very at different times of the year or in different markets. I like to think of Volume Bar Charts as the Easy Listening Music of Trading . . .
Greetings ProfLogic, Thank you again for your time.I hope to be able to do the same for you or another if I ever develop a profitable discipline. You hit the nail on the head as far as making fewer trades,patience is essential in this game.It is likely my biggest obstacle. Like I mentioned before,I want to be able to net 10 - 15 pts a day consistently.I see this mindset is flawed.Concentrate on the skill,and maybe more than my target will be met? Thanks again, cordially Tom
Good point Kiwi. I have attached a part of the original Commodities magazine October 1980 CCI article that talks about comparison studies of various cycle lengths on the CCI. I too agree that the CCI's ability to pick up divergence (and associated divergent type oscillator patterns) is excellent, so long as the period setting and tick chart parameters are optimised for the particular instrument. In my discussions with Mr Donald Lambert (CCI developer), he has told me he would rather be remembered for his work on ESMA (exponentially smoothed averages) as oppossed to (in his exact words) "all that CCI nonsense". I honestly thought he was joking around, but then he showed me that he uses a very basic Williams R (he calls it Lamda and was not even aware that it was similar to Williams R until an associate pointed it out) for his own long term investment making decisions.
I have brought up an ergodic window with two indicators of nested lengths and it is not bad ... not bad at all. I trade the es with s&r plus channels and a mix of ask/bid volume. Put quite simply, I wait for an s&r point and then watch the the strength of the players hitting the bid or ask. remember that there is a stockpile of stops both at and straddling the s&r point and these must be consumed first. The nested ergodic does make a useful contribution to this method as it is confirming the strength of price action only. I might also add that I also, avoid taking a loss. As I work to a daily net points target per lot, every loss then needs to be recovered and my allotted time is a max of 120 mins. Usually I am done inside 90 minutes. The key to this game is size and that only comes with confidence which in turn arises out of nice smooth trading. The comms on size trading are a small proportion of one point and so I have no hesitation in pulling the plug if I dont like the trade. I have a note to myself on my monitor. "To miss a trade is acceptable. To take a loss is unforgivable" It is not as simple as this obviously, but it does keep me in check.