Woodies CCI system

Why no system will ever become so widely used...

[widespread system use

I read somewhere recently that any particular strategy will be skewed if it becomes popular enough and enough people start using it.
That is indeed a widespread belief or concept. It is one of many that are often repeated by the financial media, another one is 'you can't time the market'.

I think it does not take into account the huge effect human nature plays in its application. I’ve been developing a computer program that governs my trading since late 2000 and in discussions with other developers and users since then I have experienced many scenarios of human nature that would prevent any system or method from becoming so widespread that it would invalidate itself. Below is a list of factors of human nature that would be involved.

1. The myth that any system or method can catch every point of every move every time. If any system or method had even one loss or drawdown, this would cause X percent of followers to drop off in search of a better one. If this happened on their first trade X would become a larger percent. If there were two losers in a row, I’ve seen enough posts over the years to know there would be a large exodus.
2. Along the same theme, if the system buys or sells and misses any possible further gain, another X percent would become discouraged.
3. Along the way, you will also get people who 2nd guess the system, and thereby miss trades and get discouraged. This also involves media coverage making them discouraged or too optimistic versus what the program is telling them.
4. The 2nd guessing can also take the form of pure disagreement with the system, for instance if it said to buy at a major market low when things looked especially gloomy or vice versa during euphoria periods.
5. How much work will it take also eliminates anther X percent of possible system users. To illustrate this, here’s an example. Early versions of my program took me 5 minutes per day to update. I had several people ask me if there was any way to automate that so they wouldn’t have to spend 5 minutes per day. Think about it.
6. You would also loss another X percent of investors due to ‘the grass is greener on the other side’ syndrome, wherein they would drop off to chase a different system that looked better.
7. another X percent of people out there are religiously convinced it can't be done at all; to the extent they will steadfastly refuse to even look at trade receipts. Over the years I've seen about 75% of the people who respond just quote some sound bite they once heard saying 'you can't time the market' or must be curve-fit etc etc. When you press them for details, many times it turns out they have done little or no work on their own, just read an article once by a broker who said so. JonnyT has downloaded the data and I gave him the rules and the RSI formula. If I talk to 50 people, I get perhaps 5 like him that actually will do the diligence.
8. others feel that dollar cost averaging is the only way to go.
9. Others are all hung up on management fees to the extent that they will ignore a 20% fund with 2% fees in favor of a 14% fund with 1% fees, because a sound bite told them fees are everything.
10. others will get all hung up with macro bear or bull projections and miss all the intermediate moves a system could produce for them, sometimes ending up on the wrong side of an entire run.
11. It takes money to make money, so if it takes $5,000 to trade a given system, how many potential users did you just eliminate?
12. How many people will make some excsue to withdraw their money because they want a new sofa? (or fill in the blank)


I’ve seen variants of this idea saying that if any one indicator was all that useful, everyone would follow it and it would become useless. In particular I’ve seen this said about the vix. Yet, it is as useful to my program today as it has been at any other time since the first back-tested trade in 1996.

In part, I think that is because it measures fear levels translated into option premiums and as such is a guage of the crowd. As a mass effect, the crowd is highly consistent, decade over decade.

I've been at this since late 2000 to correct my own gross inability to be a trader by using my career abilities as a programmer and fascination with contrarian indicators into a program which removed 'me' from the picture.

In short, unless it delivers 10% per month to their account in a bank with zero risk, I say no system or indicator will ever become that widespread because people are people.


QUOTE=osho67]I have been reading about this system and get the first impression that it is quite a good system. But then if it was that good as has been portrayed , lots of people would have been using it. I did a search on T2W but did not find many posts on this system

If you have used this system or know anything about this system , please post your comments. It seems I am missing something about this system. I have read positive comments but I would like to read negative comments as well. How to get the total picture?

Responses would be much appreciated. Thanks[/QUOTE]
 
The nature of your reply indicates a significant level of legical thinking, which I assume you also apply to your trading to create some success. This is good :) The logic you criticise can be extrapolated to "all trading is easy, there's a holy grail out there and anyone can do it". Well that appears not to be the case. This is a difficult thing to do. The sums of money at stake are high and not everyone can be a winner.

It is a competitive world. If you are not prepared to make most of your waking life focussed on trading you are likely to be an also-ran, just like a bad bathroom fitter, window cleaner, scientist, dentist . . . you get the picture? There appears to be a belief that because Bloomberg pours out results form an autocue, profits can flow just as easily to one's account. Remember that the people you see on the screen are not the profit makers - they are only reading what their employers tell them to read.

The details of how people fail that you discuss are well laid out and I am sure that there are dozens more. For me this is a numbers game. I understand (moderately) complex statistical theory and I record the success of systems I use based on this theory. It is rather like a massice 'A' level (18+) project gone mad (x 1000). It takes a lot of time (years) to thorough, really thorough.

Think of a chess grandmaster - how many years of practice until he reaches his peak. Great actors, decades in learning a trade.

Crunch the numbers, read statistics books. Be bored, be tired, be numerate, be well rewarded and comfortable. People do not want to be bored and tired year after year, or today, or tomorrow. That is the road to success, in just about anything.

;)

Rich
 
Morning Rich

I agree there is no easy path. I have been working now for over 6 years and somewhere past 1,000 hours. Occasionally I get someone who casually asks me if I can 'just send them the program'. I smile and think of what friend once told me' 'Tell em sure, how about $10 for every hour I've spent on it' LOL

Again, though, you're right and its the hard work needed to succeed at most everything that prevents most from succeeding.

Richbynature said:
The nature of your reply indicates a significant level of legical thinking, which I assume you also apply to your trading to create some success. This is good :) The logic you criticise can be extrapolated to "all trading is easy, there's a holy grail out there and anyone can do it". Well that appears not to be the case. This is a difficult thing to do. The sums of money at stake are high and not everyone can be a winner.

It is a competitive world. If you are not prepared to make most of your waking life focussed on trading you are likely to be an also-ran, just like a bad bathroom fitter, window cleaner, scientist, dentist . . . you get the picture? There appears to be a belief that because Bloomberg pours out results form an autocue, profits can flow just as easily to one's account. Remember that the people you see on the screen are not the profit makers - they are only reading what their employers tell them to read.

The details of how people fail that you discuss are well laid out and I am sure that there are dozens more. For me this is a numbers game. I understand (moderately) complex statistical theory and I record the success of systems I use based on this theory. It is rather like a massice 'A' level (18+) project gone mad (x 1000). It takes a lot of time (years) to thorough, really thorough.

Think of a chess grandmaster - how many years of practice until he reaches his peak. Great actors, decades in learning a trade.

Crunch the numbers, read statistics books. Be bored, be tired, be numerate, be well rewarded and comfortable. People do not want to be bored and tired year after year, or today, or tomorrow. That is the road to success, in just about anything.

;)

Rich
 
I also agree with your analysis of people's focus on systems - people tend to flit about looking for an easy answer and eventually just plain give up. I have a system which has lost often (as many as 8 losses in a row and much longer runs where there is no net profit). This is scary, even though you know you are having a bad day (or statistically in the bottom 1% of trading scenarios!).

So people lose their discipline and give up. The survival of a trader is based not on how they celebrate success, but how they react when the tough end of the statistics is playing them. At these times people need to see the bigger picture and how the whole system works over longer periods of time.

If you are really going to make a success of this BUSINESS (which is what it is) then you need to have a business / trading plan that encompasses the whole time frame that you want to survive. Most traders get caught up in the next resistance level or some such indicator rather than just seeing each trade as part of a larger money management strategy.

I am sure there are few who would honestly consider decade-sized time frames in planning a trading system, unless you were lucky / skillful and DID make that quick buck, then keep it! Some of the major factors I'd list as critical to a trading business over a long time include:

1. An easily decipherable entry exit rule(s) which is quick to execute (~ 1 second)
2. Ability to read and take in information every day from a wide variety of sources and quickly distill this information to do 1 (above).
3. Lots of good friends.
4. The opportunity to share ideas with peers (like on here, but elsewhere too).
5. Mathematically and financially literate, but not necessarily expert.
6. Physically healthy
7. Good personal relationships
8. Probably a 2nd income in the home a risk diversification strategy and to improve cash flow when in the bottom 1% of the trading system (you WILL have the worst day of your life, eventually)
9. A quiet consistent place to sit and work at
10. A desire for continuous improvement, just for its own sake
11. Knowing when enough is enough (how greedy are you / am I?)
12. Understanding best practice - Berkshire Hathaway has averaged 22% per year for 40 years (roughly). So if you are making more than that, you need to understand why. Chances are you are being lucky, not necessarily, but, on balance, probably.
13. A desire to add to this list . . .

I think people should study trading as thoroughly as a degree and take as long as that to get to a 'reasonable' level (where survival is likely).

So my advice to others would be - be thorough, read widely and be sceptical of those offering any thing that looks like value for money or worse still a free lunch.

Rich
 
Morning again

My approach was somewhat different. My program relies on several indicators ranging from vix to the macd of the sp400. I also use mclellan summations on the sp400 found at decision point. The program is the end result of hundreds of what-if formulations, always applied across the entire 10+ year data base. I don't use a piece of code unless it can be used any year, any time. It takes about 15 min per day to update and makes 20-30 trades per year max.

What it doesn't take in is news or opinion.

I agree with your basic context, success at this isn't quick and takes hard careerlike concentration and work. Based on that many are already eliminated.

Richbynature said:
I also agree with your analysis of people's focus on systems - people tend to flit about looking for an easy answer and eventually just plain give up. I have a system which has lost often (as many as 8 losses in a row and much longer runs where there is no net profit). This is scary, even though you know you are having a bad day (or statistically in the bottom 1% of trading scenarios!).

So people lose their discipline and give up. The survival of a trader is based not on how they celebrate success, but how they react when the tough end of the statistics is playing them. At these times people need to see the bigger picture and how the whole system works over longer periods of time.

If you are really going to make a success of this BUSINESS (which is what it is) then you need to have a business / trading plan that encompasses the whole time frame that you want to survive. Most traders get caught up in the next resistance level or some such indicator rather than just seeing each trade as part of a larger money management strategy.

I am sure there are few who would honestly consider decade-sized time frames in planning a trading system, unless you were lucky / skillful and DID make that quick buck, then keep it! Some of the major factors I'd list as critical to a trading business over a long time include:

1. An easily decipherable entry exit rule(s) which is quick to execute (~ 1 second)
2. Ability to read and take in information every day from a wide variety of sources and quickly distill this information to do 1 (above).
3. Lots of good friends.
4. The opportunity to share ideas with peers (like on here, but elsewhere too).
5. Mathematically and financially literate, but not necessarily expert.
6. Physically healthy
7. Good personal relationships
8. Probably a 2nd income in the home a risk diversification strategy and to improve cash flow when in the bottom 1% of the trading system (you WILL have the worst day of your life, eventually)
9. A quiet consistent place to sit and work at
10. A desire for continuous improvement, just for its own sake
11. Knowing when enough is enough (how greedy are you / am I?)
12. Understanding best practice - Berkshire Hathaway has averaged 22% per year for 40 years (roughly). So if you are making more than that, you need to understand why. Chances are you are being lucky, not necessarily, but, on balance, probably.
13. A desire to add to this list . . .

I think people should study trading as thoroughly as a degree and take as long as that to get to a 'reasonable' level (where survival is likely).

So my advice to others would be - be thorough, read widely and be sceptical of those offering any thing that looks like value for money or worse still a free lunch.

Rich
 
Hi, my first post.
I've been to Woodie's chat room several times and I liked the atmosphere there. I used to enter the room when the moderators either were in their trades or there were no trades going on at all.
I couldn't figure out much from the charts though, because there is no introductory description of basic principles of the system, at least I didn't find one. It was all into details and what not.
I was just going to take CCI Club more seriously and appear there before opening of the markets when I found this thread and the whole thing has sadly lost its appeal.

There's one thing I don't really understand and that's why the post.
If Woodie is so successful and he says in the chat room "go long" or "go short" why is it so difficult to copy his trades? After all they all get the same quotes.
As to the site it indeed seems to be cluttered and it's hard to make heads or tail of it. Having said that I stumbled upon really interesting bits like lectures by Douglas, Woodie and some other seasoned traders and advisors.
So to sum up the post:is it possible to follow his calls?
 
I have no doubts about that.
Trading CCI on your own requires time - no argument there.
But how hard is it to follow a knowledgeable trader's live calls?
Why nobody is boasting about their results?
I can't put my finger on it but I feel there's something not right with this.
 
Woodies CCI Expert

I know a sharp trader who is intimately familiar with the details of Woodies CCI System and swears by it. If you ask him nice, he may start posting here.

He may be reached at [email protected]
 
evaluating woodie or anyone

Woodies style and pace are far beyond what I can do and maintain my day job in IT. Plus I prefer a less frenetic time frame like days to weeks. That being said, If you find posters named nocona and gloe at Ihub, you'll get some good insights. Nocona in particluar is one of the more honest and upstanding people I've ever seen online. Beyond that I suggest you rely as much as possible on your own research. I have found that there is a legion of people out here who seem to live to down someones idea or method, yet when questioned, have done little or no work of their own. Drive around them.

jacho44 said:
Hi, my first post.
I've been to Woodie's chat room several times and I liked the atmosphere there. I used to enter the room when the moderators either were in their trades or there were no trades going on at all.
I couldn't figure out much from the charts though, because there is no introductory description of basic principles of the system, at least I didn't find one. It was all into details and what not.
I was just going to take CCI Club more seriously and appear there before opening of the markets when I found this thread and the whole thing has sadly lost its appeal.

There's one thing I don't really understand and that's why the post.
If Woodie is so successful and he says in the chat room "go long" or "go short" why is it so difficult to copy his trades? After all they all get the same quotes.
As to the site it indeed seems to be cluttered and it's hard to make heads or tail of it. Having said that I stumbled upon really interesting bits like lectures by Douglas, Woodie and some other seasoned traders and advisors.
So to sum up the post:is it possible to follow his calls?
 
mr Nasdaq and mr cassandra, I will definitely follow your advice and search for Nocona and gloe.
cheers!
 
Disclaimer-this isn't meant to be a personal endorsement. That said, if you are interested in the CCI one might want to talk to Paul at madscalper.com I believe. I say this because I came accross him looking for a broker. He is a broker at VCap futures in Texas. He apparently moderated the room at Woodies CCI for about 2 years. I believe he uses it everyday to make money. I don't have interest in CCI at this point so I will leave it at that and wish you all good luck.

Dan
 
The CCI and its several uses...

Whether the CCI is attached to a Daily Chart, a Weekly Chart or a 5-Mintue Chart, it is 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.

9) One of the most important charateristics of the CCI is that it is a leading indicator. It goes up first. Then, the stock follows (and vise-versa).

***************

Notice how #6, #3 and #4 above came into play on Monday's 5-Minute Chart of the QQQQ:

Chart5Min54QQQQd.PNG

 
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Has anybody used CCI in automated trading programs with any success (eg Tradestation or WealthLab) ?
 
Um, with all due respect, CCI IS NOT A LEADING INDICATOR. It is based on price, price is not based on it. A leading indicator based on price is not possible.

I have never heard of anyone able to write code that will enable a cci system to be profitable with automated trading.

Also, since it is a priced based indicator, successful set-ups will appear perfect in hindsight while set-us that didn't work out may not show up at all. Try trading the signals realtime and see what happens...
 
Agree too busy intraday for using programming code

woodies system, from comments I've read, is a busy intraday system, watching cci and other indicators for a variety of patternss they trade off. I have written my own program off entirely different concepts, but it trades off end of day data.

Your point is highly valid, you need to try any idea real time to see how it works out. Even if it does work, many of us (me for ure) are entirely unsuited to a fast-paced day trading regimen.

I would add to your comment and say another reason to check further is that there are more naysayers than you can shake a stick at on online posting boards. As ech idea is posted they emerge from the woodwork saying 'harrumph that won't work' about an amazing variety of ideas.

peppermint said:
Um, with all due respect, CCI IS NOT A LEADING INDICATOR. It is based on price, price is not based on it. A leading indicator based on price is not possible.

I have never heard of anyone able to write code that will enable a cci system to be profitable with automated trading.

Also, since it is a priced based indicator, successful set-ups will appear perfect in hindsight while set-us that didn't work out may not show up at all. Try trading the signals realtime and see what happens...
 
cci is great for a price direction indicator.
from what i have seen in live trading is it does say to buy or sell before the big movement happens.

I would not use this indicator by itself as suggested though. yes, it may keep your losses small but why have a loss? especially the way i trade.

What i have noticed if I just used CCI alone is that sometimes it will tell you to trade opposite the trend. i tried using it as a standalone as one ebook suggests and when i went back to study my trading it told me to buy at a resistance level.

I still use CCI though, because it helps me make great entries when I have the trend direction established.

Some say 3 indicators is too much, but whatever, I use 3 successfully. I'm in profit rather quickly too. I tend to trade the four hour chart so I don't have to stare at the screen all the time.

I wrote an ebook detailing my trading method. It uses Ichimoku, ADX/DMI, and CCI.
http://personaltrader.googlepages.com/personaltrader5

Why all 3?
1. Ichimoku for direction (up, down, or sideways) ... i'm not concerned about trying to catch each move up or down.

2. ADX/DMI (is the market trending or not) . if it's not volatile, you'll have slow price movement or ranging.

3. Price direction.... helps me make a good entry and be in profit soon instead of entering, being negative, then waiting for days for it to go positive.

since I have been trading this way, i'm no longer in the negative on a trade for very long.
 
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