Forex Strategy Woodie CCI or How to trade without looking at prices
Greetings, dear friends Forex traders!
Earlier we studied such a wonderful oscillator as CCI (Commodity Channel Index). Most often, this indicator does not cause much interest among most beginners. Now more and more often there is a call to drop all indicators at all and trade on a clean price chart. And the information that I will give you today, against the background of current trends, is likely to be perceived by many as a thick trolling of these same “indicator-less” trends. Indeed, today we will analyze the Woodie CCI trading system, the author of which, a successful trader Ken Wood, suggests removing the price from the chart and leaving only one indicator.
Trading System Features
Platform: Metatrader 4
Currency pairs: any
Trading Time: European and American Sessions
Recommended brokers: Alpari, InstaForex, RoboForex
The importance of clear rules in the trading system
Yes, the entry is quite shocking to many. But let's breathe out a bit and think about the need for a trading system in general. Successful trading consists of less than 20% of the trading system and more than 80% of mental control. Your brain is worthless when trading. He tries to tell you how to trade, but you cannot use emotions in trading, otherwise your account will be merged literally this week.
A good trading system is based on a set of clean rules. All you have to do is monitor the market and respond to signals, observing the clear rules of the system and then you will be in the black with the greatest probability.
In general, of course, I just can not help but say that there are several types of traders - intuitive and systemic. The former use fairly formal trading rules, which, as a rule, come down to concepts. The latter strictly follow the strict rules of their strategies, only occasionally adapting them to changing market conditions. Both camps have a right to exist, but, according to my observations, the second camp is much more numerous. The fact is that to develop even a good trading strategy, thoroughly test it on history, thoroughly study and learn how to apply it in the real market is a rather difficult and lengthy task. But to feel the market as intuitive traders do is much more difficult. Not only do you need tens and hundreds of thousands of hours spent at the monitor, you also need a certain talent, complete control over your emotions, high speed of thinking and a lot of everything that literally units of traders have.
And here the following conclusion suggests itself. If you feel tremendous power in yourself, and your potential, underestimated by humanity, wants to splash out, if you strive to show everyone how much you are underestimated, and your self-confidence, like Chuck Norris, knocks a doubter off your feet with one glance! It is likely that you are one of those 3% of newcomers who succeed in trading and one of those 1% of those 3% who survived, whom the great-grandchildren will call the gurus of intuitive trading and try to understand your train of thought, taking screenshots transactions a hundred years ago. In the end, the probability of 0.03% is not so unreal! For everyone else, it becomes completely clear that it would be nice to have a good trading system and learn to follow its rules.
Woodie CCI System
So, following the rules of the system is the most likely way in which you become a successful trader. If you do not follow strict rules in all aspects of your trading, the chance that you will make a profit is vanishingly small.
Woodie CCI is a very simple system with simple and clear rules. To successfully apply it on the market, it is enough to practice for several months and, most importantly, clearly follow these rules in any circumstances. This is exactly the system where you don’t need to think - just build up the skill of strictly following the rules of the system, and you will begin to get a plus.
The Woodie CCI system is well known in the Russian-language segment of the Internet. Its creator is Ken Wood (Ken Wood), he himself prefers to be called Woodie (Woodie).
Simplifying the situation somewhat, we can say that the essence of the system is to search for certain graphic figures, similar to the figures of classical technical analysis, on a CCI chart. Knowing such patterns in itself is useful to the trader. But Woodie CCI is much more: it’s a well-thought-out market analysis system that includes a methodology for determining the trend and finding the optimal entry and exit points for the market.
You do not need to speculate, add or invent anything when trading on the Woodie CCI system, this TS is a complete set of trading instructions. It is simple, complete, accurate, clear and unambiguous. This is what makes mistakes much less than it might seem. There are no conflicting signals in the system. Therefore, do not be afraid. You don’t have to guess about anything. Patterns, input signals and output signals are clear and well defined. Just drop all your doubts and follow the instructions.
Ken Wood traded CFDs, so the strategy was originally developed specifically for trading CFDs. But then it turned out that it works in other markets, and almost all timeframes. It was not even necessary to change anything in the settings - that is, the vehicle is universal. Woody spent many years testing in real time this system, which is why it has become simple, complete, profitable and universal.
Woodie CCI System Indicators
Most traders try to understand what this or that trading system is based on. I suppose that's right. You must understand how and why what you do works.
When the system uses too many indicators, it is not clear enough, and it is difficult for you to respond to input and output signals. Or, even worse, you enter the trade, but do not exit it, because one of the signals indicates that you can stay in the market. The system we are considering today uses only one indicator. Moreover, as I said, there is some trolling of trends that have developed at present. Namely, the author recommends not looking at the price chart at all.
The settings are as follows:
- CCI with a period of 14 black - a multi-colored histogram is built on it;
- CCI with a period of 6 red, in a system called Turbo CCI or TCCI.
Quite often on the Woodie CCI indicators you can see the EMA with a period of 34, the turning points of Woodie (Woodie pivot) and other additions. Woody himself did not use any of this in his system, so I propose to study first the basic, classical system, and then, if desired, hang something of his own on it.
In addition, Woody does not use TCCI to enter the market. For this, it uses only CCI patterns. TCCI is used only to show divergence when CCI cannot do this, draw trend lines to determine an earlier exit signal.
Now let's take a closer look at the panel on the right.
- The daily maximum and the number of points to it from the opening of the current bar.
- The right digit is the difference between the current CCI bar and the previous one, the left one is between the previous and the third in a row.
- The current CCI value on the current and previous bar.
- The opening price of the current price bar.
- The left symbol means the nearest upper price pivot, the right symbol means the distance to it.
- High of the previous (left) and current (right) price bar.
- The current price of the instrument.
- Low of the previous (left) and current (right) price bar.
- If a Woodie CCI system pattern appears, it will be displayed in this field.
- The time remaining until the candle closes.
- The nearest lower pivot level and the number of points to it.
- The daily minimum and the number of points to it from the opening of the current bar.
You can choose any timeframe, but I would not recommend dropping below H1. This applies not only to this system, but absolutely any. While you do not have a stable trading result on long time frames for at least a year, you should not dive into faster charts. It’s just that your skills and experience will not be enough to successfully respond to much more rapidly changing market situations, and you will lose your score. Decide on dozens of your favorite currency pairs, select the appropriate timeframe, for example, D1, and master the system slowly and without interruption from your main activity, controlling open positions once or twice a day.
However, I note that Woody himself traded on charts with a period of M5. Nevertheless - until you get used to the older periods, you do not understand the principles of trading on this system and do not bring the observance of the rules of the system to automatism, it is dangerous to switch to periods below the hour.
So, pay attention to this feature of the system: one chart per market with one time frame. Everything is extremely simple.
As for the time of work on this system, the most optimal period is the European session and the beginning of the American. It is highly recommended not to work on the system around the clock, since it is of a pulsed nature and the presence of good volatility is important here.
Woody determines the trend using only the CCI indicator, and he looks for inputs, outputs, patterns on the same chart. He does not look at prices at all. How does he do that?
The first thing you should pay attention to when trading is the zero line of the indicator - Zero Line (ZL). In the figure above, the zero line looks like red and green squares. It never changes and is often referred to in the Woodie CCI system. It is of particular importance in calculating CCI, and you can understand it as a point of equilibrium of the driving force for a given period. It represents the main support and resistance at a given time. Rollbacks from this line, zigzag movements along it and the intersection of this zero line (ZL) can be significant in determining the movement. The zero line is tested again and again during the trading day.
In the Woodie CCI system, a trend is defined as follows:
- If the CCI is above the zero line (ZL) for over 6 bars, then the trend is upward;
- If the CCI is below the zero line (ZL) for more than 6 bars, then the trend is downtrend.
As long as there is a trend corresponding to the “6+ bars” rule, it is allowed to have a small number of bars formed on the side opposite from the zero line and not yet indicating a trend change. But as soon as the number of bars on the back of the zero line becomes more than two, you should stop looking for opportunities to open a position and look at what is happening with the trend. It is possible that the trend is changing direction. No need to open positions until we are sure of what the market is telling us. Just be patient and wait.
In addition, when bars are displayed on both sides in a small amount - both further and behind - this indicates that there is no clear trend, so you should not open any positions at all. Stand aside and wait. Later there will be enough good trading opportunities. We do not start trading without a clear trend.
As I said, on the network you can find many variations of the Woodie CCI indicator. However, almost all of them adhere to the standard, classic color palette. In the figure above, it is quite simple to visually determine the presence or absence of a trend. The gray bars of the bar chart indicate a lack of trend and a ban on trading. The golden bar (fifth in a row) is the beginning of a new trend. The appearance of the "golden bar" signals that at the next bar we can say that the trend has established. After closing it, you can begin to search for patterns for entry.
Bars of blue indicate an uptrend, red bars indicate a downtrend. As you can see, the transition of the CCI from, for example, the upper zone to the lower one by a couple of bars with subsequent return does not change the color of the bars, as in case 1. If there is a longer intersection, as in case 2, when the indicator returns through the zero line, six bars. As you can see, the rules are very clear and simple.
Once a clear trend has been identified, the search for CCI patterns begins to open a position in the direction of the trend. The system also has anti-trend patterns, but they are a little more complicated, therefore it is recommended for beginners to start mastering the system precisely with trend patterns.
Market entry and exit
The peculiarity of this system is that all the input and output signals are well defined and very understandable. All you do is respond to these signals. No need to speculate.
The idea behind the exit signals is that when the driving force starts to weaken or the market starts to go against you, then the CCI shows the exit signal. You do not need to think, suppose or hope. Just follow the rules and your losses will be minimal and profits max.
No need to try to predict the behavior of prices, it is impossible and will only interfere. I repeat: all that needs to be done is to look at the schedule and react to events clearly according to the rules of the system, and that’s all.
The system does not involve placing a take profit order. This means that you will always take from the market exactly as much as it allows you to give in each specific situation. The indicator author advises taking from the market exactly as much as he gives you. At the same time, it is recommended to set stop loss tightly, as close to the price as possible. The amount of stops should be determined depending on the specific market. I can recommend using about ½ - ¼ of the value of the daily ATR (14). This approach is quite adaptable to both different markets and the current situation in them, and at the same time it does not depend on the time of day or the current trading session. Stop-loss orders are used as protection against events that may occur during trading and which you cannot quickly react to.
Your feet are the protection of the deposit from force majeure. You really only wait for the exit signal. As soon as you see such a signal - go out. You may have a profit or loss - it does not matter. Just follow the patterns, entry and exit signals.
Woodie CCI's strategy involves several approaches that differ in aggressiveness: “very aggressive,” “aggressive,” and “conservative.” Choose your method and stick to it. Try to trade on a demo account, using all three styles in turn, select yours. You can find out the exact match only when you test it yourself in the trade. However, after choosing a style, stick to it for a long time, do not make a choice every time you open a position.
«Very aggressive»Trading style means that you open a position when the very first hint of a trading signal for entry appears. Such cases include those when the CCI bar just twitched or turned for the first time so that a new CCI pattern is formed. That is, we do not wait for the candle to close, but enter immediately. But this style is not recommended, especially for beginners.
«Aggressive»Trading style means that you open a position when the CCI jerked or turned in such a way that an entry pattern based on the CCI pattern was formed, and it remains in that position until about 1/10 of the time is left before the bar that has formed the pattern closes segment. The meaning of this is that with this approach, it is highly likely that the pattern will retain its current position before the final formation on the chart. At the same time, you will nevertheless enter the transaction in advance and, possibly, at the best price.
«Conservative»The trading style means that you enter the market only after the CCI bar is finally formed on the chart, creating a CCI pattern, and then the next bar begins to form.This style is also not recommended, since CCI is an indicator of speed and suggests certain things. We must take advantage of this speed. When the CCI bar twitches or moves to a certain position, it shows that a change has occurred in a recent impulse, and we need to respond in order to catch this new impulse.
Therefore, a conservative style can only be used for trading on a demo account while learning the rules of the strategy. The best option for choosing a style is aggressive.
In addition to finding the CCI indicator above or below the zero line to determine the trend, classic signals can also be used to confirm the received input signal, but this is not necessary. Adding confirmation signals can simply increase the likelihood that the transaction will be successful. Confirmation signals may be:
- breakdown of the trend line (TLB);
- zero line crossing (ZLC or ZLX);
- CCI level crossing +/- 100 (100c or 100x).
A TLB confirmation signal is also used as a CCI pattern. There are even more than 3 signals / pattern / confirmation - this is just a feature of the system. As I said - regardless of the chosen trading style, the use of confirmation signals is not mandatory, but they strengthen the installation CCI pattern, which increases the likelihood of successful trading.
Woodie CCI System Patterns
Woodie CCI patterns allow you to trade very well. Woody used them for many years and added new ones as soon as he found them. He confirmed that they work in real mode, and he uses them in daily trading. He did the hard work, which required many years of hard research.
Woodie CCI Trend Trading Patterns:
1. Rollback from the zero line (Zero-line Reject - ZLR);
2. Reverse divergence (Reverse Divergence - rev diver);
3. Breakdown of the trend line by trend (Trend Line Break - TLB);
4. Breakdown of the horizontal trend line according to the trend (Horizontal Trend Line Break - HTLB).
Woodie CCI patterns for trading against the trend:
1. The Famir pattern;
2. Vegas (Vegas Trade - VT);
3. Ghost (Ghost Trade);
4. Extreme hook (Hook From Extreme - HFE);
5. Breakdown of the trend line against the trend (Trend Line Break - TLB);
6. Breakdown of the horizontal trend line against the trend (Horizontal Trend Line Break - HTLB).
Woodie CCI patterns can be used on any timeframes. They can be very successfully used even on daily charts and large TFs. Use only perfect, complete, and clear CCI patterns, and not those that are crumpled, strongly pressed to the zero line, or even have a strange look. There are a lot of patterns and you can choose the most beautiful of them.
The Woodie CCI trend patterns have the highest chance of success and are most profitable. If you have just started to study this system, I advise you to start the practice with them. As soon as you can trade them profitably, you can begin to study the counter-trend.
Rollback from the zero line (Zero-line Reject - ZLR)
This is one of the main patterns of the system. After the trend is established, we look for a situation where the CCI chart is as close as possible to the zero line (without reaching, or going a bit behind ZL). Usually, a satisfactory condition is +/- 50 zones (some traders tighten conditions to +/- 30). Then CCI turns around and thereby confirms the trend. This is where the market entry point lies.
Reverse Divergence - Reverse diver
As with all trend patterns, we first need to make sure that a trend has established. For a bullish trend, we look to see if there are peaks and troughs on the CCI charts, such that you can draw a trend line towards the zero line. We need two peaks to build a trend line. To draw it, you can use both CCI and TCCI. For a bearish trend, everything is mirrored.
To confirm this pattern, there must be an intersection of the main lines (+/- 100, ZL) and then the lines we drawn earlier.
The figure above shows a good example - a trend line drawn at two points (1 and 2), the intersection of CCI and TCCI, and the entrance to sales at point 3.
It is easy to notice that this pattern will very often be accompanied by the ZLR pattern. This strengthens the significance of both patterns and increases the chances of success:
The chart above is not entirely correct for this pattern, since it was actually allowed to cross the zero line up between points 1 and 2, which should not be in this pattern.
If you look at the points of contact of the Woodie CCI system with wave analysis, you can find that the RD pattern is based on re-entering the trend after the end of the correctional wave in the form of a zigzag.
This pattern is built on all peaks, even the smallest. In this case, it will be almost correct, except for the intersection of CCI and TCCI, as in the figure above.
Break of a trend line on a trend (Trend Line Break - TLB)
This pattern is very similar to the previous one. The main difference is that we are building a trend line not by small peaks or troughs within a single wave, but by the tops of the waves themselves. This means that on the CCI chart, peaks 1 and 2 (or troughs, for a bear market) along which a trend line is built can (although not required) be interspersed with short ZL intersections.
The trend line should originate from a zone at least outside 100. Moreover, the more points of contact between CCI and our line are, the stronger it is and the more significant the signal will be. A signal to trade is a breakdown of the trend line in the direction of the current market direction (trend). The closer this breakdown occurs to ZL, the better. Also, finding the first point outside line 200 further enhances the chances of success.
Breakdown of the horizontal trend line according to the trend (Horizontal Trend Line Break - HTLB)
This is the last trend pattern. A horizontal trend line should occur within area 100. The rules for constructing a horizontal trend line are the same as in the case of the TLB pattern. CCI, crossing our horizontal line, gives a signal to open a position. This pattern is enhanced if it relies on more than two peaks. Both CCI peaks and TCCI peaks can be used (which, as in all other cases, is more risky). The pattern is quite rare, but still I managed (with difficulty) to find one example, although it is far from the most ideal:
The line is quite close to level 100 and there was no intersection of CCI and TCCI.
Counter trend patterns
More risky traders prefer to catch the moment of a trend change and enter against the existing trend, since such a deal has potentially attractive prospects. Indeed, while our indicators show that a trend has established, it may turn out that the latter is almost over. But even if the trend remains valid, corrective movements in themselves can be quite significant. From this point of view, anti-trending work may make sense, however, the high riskiness of such inputs involves setting close stops, as Woody advises, in fact. Let's get acquainted with these patterns in more detail.
It is difficult to say what its name means. Perhaps this is the name or surname of Woody's colleague who prompted him this pattern. The latter is a rebound from the zero line (ZLR), which turns out to be false on the next bar.
In other words, the CCI should bounce off the zero line (it is allowed that the CCI does not reach ZL a bit or go a little behind it) and turn around again on the next bar towards ZL. An aggressive trader can immediately open an anti-trend deal. Conservative - wait for the CCI to cross the zero line.
I found a very beautiful example on the EURUSD H1 chart:
Additional confidence will be brought by the finding of the pattern in the region of 50. So the picture above is a great example.
As you probably noticed, this pattern is a reversal of the position that we would open according to the ZLR pattern (rebound from the zero line). So in this case, we would lose about 3-5 points on the initial signal. In most cases, a strict adherence to all system signals really makes losses minimal, and profits max.
Nevertheless, this pattern is quite complicated for novice traders, and not in recognizing it, but in order to assess the advisability of entering. If Famir turns out to be false, then the trader will be left with the feeling of complete loss and total bad luck - after all, he had to make losses by closing the previous position opened according to the pattern of rebound from the zero line.
To ease the task for novice traders, Woody used LSMA for illustrations from 13 to 21, applied to the price chart. If the price crosses the LSMA up - this serves as a confirmation of a reversal bullish signal, if down - then a bearish one.
If the intersection has not occurred, do not enter the deal and exit the current position. In our case, the pattern entry was justified.
Vegas (Vegas Trade - VT)
First, CCI goes to an extreme in the direction of the current trend (up to +/- 200 or higher). Then it returns closer to ZL at least in the +/- 100 zone. After that, for 3 or more bars the indicator line makes a smooth turn in the direction of the trend. This U-turn looks like a small rounded groove or platform. Next, CCI moves slightly in the direction of the trend and reverses again. A signal to trade is the fall of the indicator line below the previously designated recess. The figure below immediately shows three examples of this pattern:
As you can see, the first and third patterns worked very well, but the second would most likely have to be closed at a small loss or small profit. And this once again proves that it is necessary to practice selectivity to patterns - in the second case, the platform was not at all gentle and the indicator went too high and too sharply up. Therefore, I repeat again - be more picky and attentive to such things, trade clear and understandable patterns.
By the way, at the time of the formation of Vegas on the price chart, as a rule, the figure of the classic Two Peaks technical analysis is formed. In addition, the Vegas pattern is more reliable than Famir, but it is less common.
Ghost (Ghost Trade)
The Ghost pattern is an anti-trend pattern that got its name due to the fact that a figure resembling a ghost is drawn on the chart. Although, it would be more true to call this model “Head and Shoulders,” which it essentially is.
The ghost includes three peaks along the trend. The average peak is higher than the first and last. A support line is built along two troughs to the left and to the right of the middle peak. As soon as CCI, having made the third peak, breaks this line, a position should be opened. I note that the line can be parallel, or directed from or to the zero line.
Extreme Hook (Hook From Extreme - HFE)
This pattern is easiest to identify. In the role of the anti-trend pattern, HFE occurs when the CCI goes beyond +/- 200 and turns towards the zero line. This is a very unreliable pattern, it is better not to use it as an independent signal to enter the market.
Typically, HFE precedes the signal from other anti-trend patterns, such as HTLB and TLB. That is, it would be ideal if this pattern is confirmatory for the main signal.
Break of a trend line against a trend (Trend Line Break - TLB)
The anti-trend TLB is built in exactly the same way as a regular TLB. The difference lies in the fact that, after the breakdown of the line we constructed, trading is conducted against the current trend. That is, the whole difference lies in the fact that here we enter against the main trend:
Breakdown of the horizontal trend line against the trend (Horizontal Trend Line Break - HTLB)
The same is true for HTLB. A position is opened as soon as a horizontal trend line breaks towards zero. For this pattern, confirmation from other trend changing patterns, such as HFE, is also desirable. To get a good signal - the figure must be in the zone +/- 100.
Now that we know how to enter the Woodie CCI system, it is time to work out the exit methods. There are certain rules when the Woodies CCI trading system requires the exit from the transaction:
- The CCI line hooks or moves smoothly, without tendency;
- The CCI line makes a hook from the extremum zone, out of the range of +/- 200;
- The TCCI chart goes through the CCI inward;
- The CCI graph crosses the ZL line;
- The CCI chart does not go through the trend line in our direction;
- LSMA shows the opposite movement to our position.
CCI graph crossing line ZL
The essence of this rule is simple. The CCI movement in the positive or negative area expresses the tendency of price movement - up or down. With rising prices, CCI will be in the area above the zero line, with falling below.
However, in order to accurately determine the trend, this is not enough. As we recall, an additional requirement was the presence of 6 or more bars above or below the zero level. It should be borne in mind that when we are in an anti-trend situation, we are very risky, therefore it is absolutely impossible to wait for 6 bars to make sure that the trend is moving in our direction. However, it should be noted that the signal according to this rule is somewhat late, and using other rules, you can close the trade earlier.
The figure shows an example of exit from a transaction based on this signal. In area 1, we open an anti-trend trade based on the HFL pattern, and we exit from it in zone 2, when the CCI returns to the area of positive values. It is easy to notice that this signal is significantly delayed and in most cases the trader will be able to close the position by 1, or even 2 bars earlier, using other exit rules (for this figure, for example, the rule “TCCI crosses CCI inward”).
CCI line hooks or moves smoothly, without tendency
We know that the Woodie CCI system is scalping, so it has its own characteristics. When the price movement slows down or ceases, we can state the end of the impulse and expect a quick reversal of the trend. However, this may not happen, so the tactics of traders working on a different system in this situation may be this: pulling up stops and waiting for further development. Woody's tactic, on the contrary, is to track short-term movements and quickly take profits.
It is very difficult to track the movement of CCI, guided by this rule, so we will add some caveats. As we recall, the past rule was somewhat late, and this (no progress, schedule in place) was designed specifically for the quick response of traders. However, you should not take this rule so literally, but it is better to refer to other confirming indicators, for example, the TCCI indicator.
In the figure above, we made another entry using the HFL pattern, and then fell into the period when the CCI indicator chart was for a long time without movement. In this case, in addition to the apparent lack of movement on the chart, the HTLB pattern is located in the indicator’s flat area according to the current trend. Therefore, by closing a deal in a purchase, we can immediately open a position in the sale.
CCI chart goes through the trend line not in our direction
In the Woodie CCI system, this rule to exit the anti-trend position is perhaps the most reliable. It consists in exiting when the trend line is broken in the direction opposite to the entrance.
In the figure above - again the entry according to the HFL pattern at point 1 with the exit at point 2 on the breakdown of the trend line.
LSMA shows the opposite movement to our position
Another case where the Woodies CCI system recommends closing a position refers to a situation where the moving average shows the direction of movement in the opposite direction than the one in which we have an open trend position.
An anti-trend entry was made in this figure, but the moving average continued to show growth. Therefore, when the CCI indicator crossed the zero line and the TCCI turned in the direction of purchases, an exit was taken from the transaction.
TCCI crosses CCI inwards
Since TCCI has a shorter period, it is obvious that it responds faster to a slowdown in the price impulse or to the first signs of a trend change than a slower CCI.Therefore, in some cases, the best conditions for exit from the transaction arise when the TCCI crosses the CCI chart inward:
At the entrance to point 1, we will exit at the intersection of CCI and TCCI at point 2.
In most cases, exit by this rule means closing the position too early. One often sees how, after the TCCI line crosses the CCI chart, the price movement does not stop, but is gaining momentum. TCCI is often too sensitive a tool, prematurely signaling the closure of a position. A trader using the Woodie CCI system in his work should analyze the charts of his financial instruments for the suitability of this rule for his instruments and time ranges.
CCI Hooks From Extremes
When the CCI chart is in zone 200, this indicates a strong oversold or overbought state. The price moved too fast and therefore many traders can decide that staying in the market is risky. Currency speculators begin to close positions and take profits. Price movement is losing speed, and rollback will soon begin. This rule is similar to a regular CCI hook.
It is important to note that here we do not wait for the bar to close. Usually in this case, the events develop too rapidly to allow themselves to lose profits, waiting for the closure. Most likely, our stop loss will work before this happens. Therefore, as soon as CCI went beyond 200 and started the reverse movement, the position should be immediately closed.
When one or more output signals appear, this may mean that another Woodie CCI pattern is being generated. This new CCI pattern may be a signal to open a position in the opposite direction to the current position. That is why we exit the deal. In addition, when it is already necessary to exit the market, never wait for the final formation of a bar against an open position. Sometimes you can’t wait too long in trading, as it will cost you a loss of profit and bring big losses. This exit rule is very strict because it is necessary to take profits and exit when the CCI warns that the market may go against us.
If after opening a position trading develops in the right direction, for example, more than 7 bars in a row, but the indicator still does not show the first exit signal, then you must change the hard stop loss setting to breakeven plus a few points. As soon as the position you have opened has gone far enough in the right direction, do not let it turn into a loss-making one.
All you need to do to successfully trade on the Woodie CCI system is to expect a pattern to form. You enter and exit based on the signals defined in the system and you do not need to invent anything else. Do not follow the movement of prices, do not fall into a mode of hope and do not want the pattern to form in the way you need. Do not monitor how much you earn or lose when trading. Do not add what you have learned to this system. Just follow the directions of the vehicle, just follow the patterns.
In fact, despite the curiosity of the call “do not look at the price chart” during trading, especially against the backdrop of the heyday of Price Action methods, this system is not trolling, but a very real working tool.
Modifications of the CCI indicator
P.S. Link for those who do not swing: