When I first ran into Ken Wood (known as Woodie) and his method of trading using a CCI indicator, I though he was full of it.
I mean, some of the things he says are pretty crazy. For example he talks about he looks for patters on an indicator.
We all know that indicators lag price. So he had to be knowing about things in the price after they'd occurred. Well, it's true that the CCI lags (otherwise it would be predicting the future, and that's impossible), but it's lag isn't that great.
Furthermore, the CCI does something that really helps. It makes things easier.
I mean instead of watching the price bounce all over, you have just one line. Thing about it. For each time period (for each bar, that is), you have four prices, a high, a low, and open and a close.
With Woodie's CCI, you have just one. The value of whatever the price is there. That's it.
So it really simplifies things. Then if you carefully look at some of his patterns (e. g. the zero-line reject or the ghost or any of the others), you notice something.
All those patterns show fundamentally sound trading opportunities in the price action (due to support and resistance concepts usually).
Woodie recommends just using the CCI indicator with no price. I'm going to contradict him. Well, somewhat. Here's the deal.
You need to tune yourself into the market. You need to understand what a good ghost looks like. You can only do that by watching the price at the same time and getting a grasp of what the market is doing.
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