Gump,
I guess i would address this to you since you are amazing at building indicators.
What are your thoughts on making this for NT?
....the charts didn't copy below.....
TraderTalk Technical Tutorial
The Dual Commodity Channel Index
To alert the time of entry or exit from markets HedgeHog uses the Dual Commodity Channel Index (DCCI). The CCI was introduced by Donald Lambert in 1980. It is a plot of the ratio of the moving average - average price difference to a fraction of the mean deviation of average price.
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CCI = Moving average - Average price/ 0.015 (Standard deviation of the moving average)
average price = (High + low + close)/3
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DCCI is the use of a smoothed CCI along with the unsmoothed CCI to create two oscillator lines, the crossovers of which offer a mechanical trading alert.
Lambert's recommended the use of the CCI as a market timing tool is all but useless. The CCI is quite definitely an oscillator and as such one should respect the do's and don'ts of using oscillator studies.To slavishly follow the apparent buy and sell signals of an oscillator can be disastrous in strongly trending markets, at best you could exit a trend prematurely; at worse, God forbid, you could end up trading against the trend.
HedgeHog's use of the DCCI, as I will outline, is usually a leading indicator indicator; it is not a lagging indicator. Because of these properties (an oscillator and a leading indicator of price change) I strongly caution you that this indicator indicates the very high probability of "end of trend" immediately ahead; remember probability does not preclude the possible from happening. Basic to using the DCCI as a timing indicator then, is the tenet that, the price trend is the trend until proven otherwise.
The DCCI Charts
The DCCI are plotted about the zero. The chart traditionally shows the +/- 100 and +/- 200 levels. I consider the +/- 200 to be overbought (OB) or oversold (OS) respectively. For daily price charts HedgeHog uses the 80 period CCI and a 5 period smoothing of the 80 CCI to give a 5:80 DCCI. Crossovers of the 5 and 80 lines are possible sell and buy signals. Subsequent violations of the price trendline are then taken as the definitive times to exit or enter the market. The frequently observed phenomenon of divergence between price and CCI extremes makes it imperative to correctly identify the appropriate price trend line. While the CCI is above zero the overall market is in an up trend and when the CCI is below zero the market is in a down trend. Trading from the time the DCCI alert is confirmed, using the criteria I've outlined, will give you a substantial lead over waiting for a zero CCI cross-over, with a high probability of being correct.
I guess i would address this to you since you are amazing at building indicators.
What are your thoughts on making this for NT?
....the charts didn't copy below.....
TraderTalk Technical Tutorial
The Dual Commodity Channel Index
To alert the time of entry or exit from markets HedgeHog uses the Dual Commodity Channel Index (DCCI). The CCI was introduced by Donald Lambert in 1980. It is a plot of the ratio of the moving average - average price difference to a fraction of the mean deviation of average price.
--------------------------------------------------------------------------------
CCI = Moving average - Average price/ 0.015 (Standard deviation of the moving average)
average price = (High + low + close)/3
--------------------------------------------------------------------------------
DCCI is the use of a smoothed CCI along with the unsmoothed CCI to create two oscillator lines, the crossovers of which offer a mechanical trading alert.
Lambert's recommended the use of the CCI as a market timing tool is all but useless. The CCI is quite definitely an oscillator and as such one should respect the do's and don'ts of using oscillator studies.To slavishly follow the apparent buy and sell signals of an oscillator can be disastrous in strongly trending markets, at best you could exit a trend prematurely; at worse, God forbid, you could end up trading against the trend.
HedgeHog's use of the DCCI, as I will outline, is usually a leading indicator indicator; it is not a lagging indicator. Because of these properties (an oscillator and a leading indicator of price change) I strongly caution you that this indicator indicates the very high probability of "end of trend" immediately ahead; remember probability does not preclude the possible from happening. Basic to using the DCCI as a timing indicator then, is the tenet that, the price trend is the trend until proven otherwise.
The DCCI Charts
The DCCI are plotted about the zero. The chart traditionally shows the +/- 100 and +/- 200 levels. I consider the +/- 200 to be overbought (OB) or oversold (OS) respectively. For daily price charts HedgeHog uses the 80 period CCI and a 5 period smoothing of the 80 CCI to give a 5:80 DCCI. Crossovers of the 5 and 80 lines are possible sell and buy signals. Subsequent violations of the price trendline are then taken as the definitive times to exit or enter the market. The frequently observed phenomenon of divergence between price and CCI extremes makes it imperative to correctly identify the appropriate price trend line. While the CCI is above zero the overall market is in an up trend and when the CCI is below zero the market is in a down trend. Trading from the time the DCCI alert is confirmed, using the criteria I've outlined, will give you a substantial lead over waiting for a zero CCI cross-over, with a high probability of being correct.
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