Trading Woodies CCI System by Jeff
email@example.com Copyright © 2004 Jeff Gannon
Woodie has defined
the trend using the CCI indicator only.
Woodie does not use
price bars to define the trend.
Woodie does not use
the 34-ema to define the trend.
Woodie does not use
a larger time frame to define the trend.
Woodie uses the same
chart to define the trend as he does to spot a CCI pattern for that market.
Each market will
have its own trend and is not to be considered when taking a trade on another
You do not need any
other charts, markets or indicators to see and define the trend.
Woodies CCI system you must trade with the trend. You do not trade counter-trend
1 Chart Above –
Woodies CCI trend
definition is as follows:
If you are new to
trading Woodies CCI system then you should only look for trades that are with
the trend until you no longer need this document.
The CCI zero-line (ZL)
is a very important and integral part of Woodies CCI system. All of Woodies CCI
patterns are defined around the zero-line. It represents major support and
resistance at this moment in time. I repeat, at this moment in time. This means
that it does not represent a forward-looking projection of where the support and
resistance will be in moments from now. The CCI patterns will be adjusted
accordingly as the market moves and thus create a new current ‘here and now’
zero-line. The zero-line is tested over and over throughout the trading day.
Furthermore, the CCI
+/- 100 value line represents minor support and resistance at this moment in
time as well. The CCI +/- 200 and greater values represent overbought (+200 and
higher) and oversold (-200 and lower) market conditions at this moment in time.
While a trend is
taking place as defined by the 6+ bar rule you can have a few bars print on the
other side of the zero-line and still maintain the current trend. But as soon as
you see 2+ bars in a row on the other side of the zero-line then you should back
off from looking for trades and wait to see what will happen with the trend. The
trend might be changing. There is no need to be taking trades unless we are sure
of what the market is telling us. Just be patient and wait.
Also, when bars are
printing on both sides back and fourth every few bars it is telling you that
there is no clear trend so you should not be taking any trades at all. Just
stand back and wait. There will be plenty of good trades later. We do not take
trades when there is no clear trend. Period.
Until you are
following these guidelines consistently and making profits you should only be
taking trades that are with the trend. Stay away from trades that are
We see that in chart
1 the yellow box has 6+ CCI bars below the zero-line so we are looking for
shorts. Also notice in chart 1 that after the square yellow box the CCI crosses
the zero-line and prints bars above it. For the first couple bars that are
printing above the zero-line, maybe 1 to 2 CCI bars or 3 maximum, we would still
be looking for shorts. But be warned that the more bars that print above the
zero-line the more we would stop looking for short trades and start counting the
number of bars above the zero-line. Once we can count 6 or more bars above the
zero-line then so we can start looking for long trades.
In chart 2 we see a
mix of bars above and below the zero-line. It looks like a mess. No real defined
direction so no real trend. Just stay away from trading and wait until we get a
solid set of 6 or more bars on either side. When no trend is defined then we
cannot take any trades. This is one of the ways Woodies CCI System forces you to
not over trade. It’s built into the system. You don’t have to think about
it. It just happens if you follow the rules.
In chart 3 we see a
clear trend of 6+ CCI bars above the zero-line so we are looking for longs.
After there is a
clear trend defined you will look for CCI Patterns to take trades in the
direction of the trend. Again, if you are new and still need this document then
stay away from counter-trend trades. Also remember that many very experienced
traders only take trend trades as well. After all the market should be moving in
the direction you want to trade it to start with. There is no reason why you
can’t take trend trades your whole entire trading life. It’s natural, it’s
normal and it’s highly recommended that you do take trades with the trend.
Woodies CCI Patterns that are trend trades:
Woodies CCI Patterns
that are counter-trend:
Again, when new to
Woodies CCI you should only take trend trades. Do not take counter-trend trades.
You will notice that some of the trades are both trend and counter-trend type
trades. If you are new then you just take that pattern when and only when you
see it develop in the direction of your trend.
You will learn all of these patterns later in this document. They are all just simple CCI patterns defined by Woodie that you will learn to spot on your charts in order to take a trade. Using Woodies CCI patterns instead of everything else allows you to forget all the ‘knowledge’ you have about trading, take advantage of the momentum of the market movements and, more often, beat other traders into and out of the market by one or more bars. All this is done without emotions, guessing or confusion about whether you should be in or out of a trade. Simple as that.