How to Trade Forex With Woodie's CCI (This Really Works!)

When I first ran into Ken Wood (known as Woodie) and his method of trading using a CCI indicator, I though he was full of it.

I mean, some of the things he says are pretty crazy. For example he talks about he looks for patters on an indicator.

We all know that indicators lag price. So he had to be knowing about things in the price after they'd occurred. Well, it's true that the CCI lags (otherwise it would be predicting the future, and that's impossible), but it's lag isn't that great.

Furthermore, the CCI does something that really helps. It makes things easier.

I mean instead of watching the price bounce all over, you have just one line. Thing about it. For each time period (for each bar, that is), you have four prices, a high, a low, and open and a close.

With Woodie's CCI, you have just one. The value of whatever the price is there. That's it.

So it really simplifies things. Then if you carefully look at some of his patterns (e.g. the zero-line reject or the ghost or any of the others), you notice something.

All those patterns show fundamentally sound trading opportunities in the price action (due to support and resistance concepts usually).

Woodie recommends just using the CCI indicator with no price. I'm going to contradict him. Well, somewhat. Here's the deal.

You need to tune yourself into the market. You need to understand what a good ghost looks like. You can only do that by watching the price at the same time and getting a grasp of what the market is doing.

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Getting To Know How Indicators Works For Traders

If you have been trading the Forex market then you must have known that in technical analysis, we are required to be able to read the chart properly. There are lots of traders out there that use technical analysis to determine the future price movement. They calculate and analyze the chart based on the previous price data. Technical analysts often believe that price will repeat what it's done in the past. That is why previous data on the chart is really important for technical analysts to examine so they can make the best judgment on the next possible price movement.

To help them determine price's next movement, analysts usually adding some indicators to their chart in order to help them reads the chart more clearly and to have guided help from them on what might be happening in the future.

There are many indicators that trader can use to help them in their technical analysis. Each one of those indicators are unique, have their own ability to predict price movement and very helpful if the traders knows how to use them properly. Some indicators are usually attached to the chart below the price while other are usually attach directly to the price itself. Many traders uses more than three or even five indicators, while some of them uses only one indicator or none at all. It is just individual preferences really.

Technical traders such as the scalp traders usually combine two or more indicators to help them predict price movement easily. Scalp traders always like to use indicators that are fast such as the Parabolic SAR, Moving Averages and Bollinger Bands. The combination between those three can bring good result for short term traders such as the scalp traders. Scalp traders are commonly using the small time frame such as 5 minutes and 1 minute chart. That is why they need fast indicators to help them make the best judgment from it.

Swing traders and day traders are known for their use of lagging indicators. Lagging indicators are the indicators that always move by following the price action. This mean indicators are forming after the price has close. Such indicators are like Moving Average Convergence Divergence (MACD), the Slow Stochastic and Relative Strength Index (RSI)

Lagging indicators are usually telling the traders about the possible price reversal that might be happening in near future. Overbought and oversold condition can also be recognized through them. For example, there are points on the Slow Stochastic that telling people whenever the indicator reach to some points, the overbought - oversold condition may apply. And when those conditions are applied, traders might want to be very careful if they are still having open position because price will probably out of gas to continue its move to the upside or to push even lower to the downside.

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How to Trade Forex With Woodie's CCI (This Really Works!)

When I first ran into Ken Wood (known as Woodie) and his method of trading using a CCI indicator, I though he was full of it.

I mean, some of the things he says are pretty crazy. For example he talks about he looks for patters on an indicator.

We all know that indicators lag price. So he had to be knowing about things in the price after they'd occurred. Well, it's true that the CCI lags (otherwise it would be predicting the future, and that's impossible), but it's lag isn't that great.

Furthermore, the CCI does something that really helps. It makes things easier.

I mean instead of watching the price bounce all over, you have just one line. Thing about it. For each time period (for each bar, that is), you have four prices, a high, a low, and open and a close.

With Woodie's CCI, you have just one. The value of whatever the price is there. That's it.

So it really simplifies things. Then if you carefully look at some of his patterns (e.g. the zero-line reject or the ghost or any of the others), you notice something.

All those patterns show fundamentally sound trading opportunities in the price action (due to support and resistance concepts usually).

Woodie recommends just using the CCI indicator with no price. I'm going to contradict him. Well, somewhat. Here's the deal.

You need to tune yourself into the market. You need to understand what a good ghost looks like. You can only do that by watching the price at the same time and getting a grasp of what the market is doing.

Read more...

Forex Beginners - Using Bollinger Bands in a Trending Strategy That Absolutely Works

One of the best forex indicators is Bollinger Bands. They are very simple to use, they are free, and they are extremely reliable. At just a glance, you can tell if the market is trending or stuck in a range. You can tell if the market has hit extreme prices or if it is about to explode.

So I want to show you a simple trading strategy that relies heavily on Bollinger bands. And, oh yeah, it makes pretty good money!

Identifying a trending market with Bollinger bands is very simple. If the market is trending up, price will walk up the upper band. If the market is trending down, price will walk down the lower band.

Bollinger bands plot a moving average in the middle, and the extreme bands are formed by standard deviation lines around that moving average. Now don't be scared by the algebraic term standard deviations. You don't have to know how to calculate them - the indicator does that by itself.

Normally, the standard deviation for Bollinger bands is set at 2. For this strategy, you want to change it to 1. Just go into the settings of the Bollinger indicator and change the number 2 to 1. This will help you identify trading opportunities better.

Now that you have changed the standard deviation, you will notice that the extreme bands are now closer to the moving average. This is exactly what you want.

Now look for any candle that closes outside the bands. When you see this, enter a trade in the direction of the closing candle. Your stop loss will go on the other side of the candle.

So, in an uptrend, you will place your stop below the candle that closed above the upper band. In a downtrend, you will place your stop above the candle that closed below the lower band.

Your take profit should be twice as much as your stop loss. For example, if your stop loss is 25 pips, then your take profit would be 50 pips.

Pretty simple, right? Not hard at all, and that is the way most profitable trading strategies are - simple.

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