Thought i will open a new thread in order not to clutter the Alsi thread and to keep all the CCI system info in one place and thread
Here is the basic summary of the system:
1. Open a 5 min chart
2. plot 4 smas
a. 3 day/period
c. 204 day/period
d. 34 day/period ig only allows maximum 3 smas so i use the 34ema
3.Open up the CCI indicator and since we using the 5 min chart, use cci 14
4.Zero line on CCI indicator is the key to watch.
5. Also plot the daily pivot points on the chart.
When both the CCI crosses above zero and the 3 daysma crosses over the 10 day sma...go long
When the CCI crosses below 0 and the 3 day sma crosses below the 10 day sma...go short
Tips,suggestions and advice -
All notes below assumed you going long for day trading..
1. Only trade if both cci zero line break and sma cross happens.Don not jump the boat and
assume because one happened, other will follow soon.Must wait for both to happen. You should see an average of 5 trades per day using the 5 minute chart system.
2. If you take the long trade and the CCi falls below zero line again, close the trade at a
loss as its a failed trade.
3. The 204 day/period sma is used as a guide for the trend for the day which is very
important. if the 204 period trend is up, IE the slope of the line is sloping
upwards,majority of your trades should be on the long side and such longs should be held
for a longer period of time compared to shorts.If a short signal is given in up uptrend
day, such a trade must be a quick scalp IE do not hold on long for this short. However if
you in short and the 204 sma slope stats to straighten from an upward sloping direction,
this could mean a change in trend for the day and such short, depending on your risk
appetite, could be held on longer until the slope changes downwards in which case you have
a winning change of trend direction short.
4. Do not , and i repeat, do not trade before 9.15am and after 5.30 pm as the CCI will give
false signals.Also try not to trade the system between 2.15pm to 4.00pm (just before and
after US markets open).This not a good time to trade as markets are generally going
sideways before US markets open and false signals after Us opens when the dumb money gives
it the wrong direction in the first hour of 30 minutes of US trading)
5. The slope of the CCI curve is very important when it is going above the 0 line. If it
corsses above zero at hardly any angle. it means we in a sideways market.The system may be
giving a long signal but profits could be very small and it could reverse down below 0
slowly down again. My suggestion, because this is a momentum type of system is to only go
long if the slope of the zero line breaks above zero at more than 45 degrees. This will
normally be noted a longer than normal 5 min green candle on the price bar.
6. If you have a very long 5 min candle compared to the last few candles as she pushes
through above 0, this is the trade you want to look for where this momentum will shoot it
up very quickly.
7. The red hump on top for longs and green hump at the bottom for shorts could be referred
to or imagined as your bank vault. The more humps at the top for longs means your monies is
increasing into your bank vault.
8. If the long signal is given but the cut is below 45 degrees on the cci zero line, i said
i will not go long as still lack of momentum. However if anywhere above the zero line (
even above the +100 line) if momentum reappears with a nice size long candle to the upside,
the system still allow you to go long. Do not assume you missed the trade at the zero line
9. Do not trade in a side wards trending market even if the signal for long is given and
also if the cut is more than 45 degrees. If you understand what the CCI indicator is(a momentum indicator which measures the deviation of the price from its statistical average -
basically an average of the previous price bars)and thus in a sideways market, any slight price movement will cause the CCI indicator to be very sensitive for false signals. Also if the 3, 10 and 34 day/period smas are all bunched very close together, this also suggests a
sideways market and here to no trades until a very long price candle suggesting a break
10. Ideally when you go long, you want to see a significant gap between the 3 day sma and
the 34/204 day sma. The price should move from the 3 day to at least the 34 day for it to
be a good trade. First resistance should be the 34 day sma. A break of that means continuing
to hold the trade, using the 34 day now as support.
11. Pivot points come in very handy to determine support and resistance levels once in a
All the above are for longs. For shorts and depending on your risk appetites, i noticed
doing the back test, although you can go short at below CCI 0 as per the system, your risk
is actually reduced if you only short if the CCI goes below -60 as you will avoid
whiplashes and small profit trades. This i noticed because our markets have been in a
serious uptrend last few months. However im prepared to go short below 0 as the chance of
catching a day trend reversal becomes easier and more profitable when you catch it early.
Although the above system is more for Alsi day trading, this system could be used for share
trading and investing too. However longer time frames should be used for this.The CCI of 20
could be used for share trading or 50 for share investing. If someone could do some
back test results on the share side using the different CCis and smas and post it here, it
will be appreciated.
1. I also use other indicators such as Stochs and Macd to help with exits.
2. If the 204 period trend is up, hold on to those longs longer as one bank vault hump could
be followed by a series of others. For shorts, remember if trend is up, its a very quick in
and out, unless you see a trend change happening.
3. No fixed rule for exits and it all depends on one risk appetite. Stochs falling below
60, CCI falling below +60 , price falling below 34sma, 10sma starting to slope downwards,
etc could be all used as exit signals.
A private message from a forum member who has not posted in the form before messaged me to thank me and also mentioned that he has used the system effectively and used the Bollinger Bands as his exit strategy. Waiting for me details from him or would appreciate it if he could post a chart here showing the exit point.
I would love further input from anybody else who uses this system and am open to any suggestions to improve and refine it. If you make money out of it, PM me for my bank account details.
More about trend reversals and pullbacks regarding CCI will follow once tested and back tested.