CCI Indicator Explained: Better than RSI? // Commodity Channel Index Trading Strategy Chart Meaning Best Settings Youtube CCI vs RSI stochastic MACD stock forex video pdf beginners day secrets video chart patterns settings john swing daily rsi stochastics macd technical scalping basics how to use simple david moadel
welcome to looking at the markets with David Modell today I wanted to give you
an alternative to RSI and it's called CCI commodity channel index now don't be
tricked into thinking that it's just for commodities people use it for stocks
ETFs and commodities as well they use it for all kinds of things very
successfully alright and if you don't like RSI or you kind of like it but
maybe you don't like it here's something that might actually be
better alright let me show you what I mean and today I'll be using
stockcharts.com and I'll be using the daily candlestick chart alright and so
I'm thinking like a swing trader here using the daily chart although all these
indicators can be used if you adjust the time period for a day trading or long
term or whatever you like alright so let's say you're in stockcharts.com and
you put up your chart for whatever stock or commodity or ETF whatever you like I
did this for Baidu alright you go down to the bottom and you go to indicators
alright and today I'm gonna put up the RSI at the standard setting for the
daily chart which is the 14 period but I'm also gonna put the CCI alright so
you have to look for it it's in there alright
CCI commodity channel index okay so you put that on there and the standard
setting for that is the 20 period all right and I like to put them below the
chart and you click update and here you go so this is for Baidu for
an example and if you look at Baidu we can see the problem with RSI on the
standard setting okay if you're looking for a buy signal a lot of people use the
RSI as a buy signal what the what they'll do is they'll wait until it goes
below 30 into oversold territory and then they wait until it comes back up
above 30 ok so when it goes below 30 and then comes back up above 30 out of
oversold territory that's a very common buy signal alright because not only is
it cheap but it's also coming back up alright so the momentum is coming back
up out of the inexpensive range which is what I look for okay but the problem
with the 14 period RSI is that look at this you know you've got all this
chopping going on here lots of perfectly viable dips here alright when you could
have made money and it's not giving any buy signals here at no point did it go
did it decisively it almost went here but not quite at no point and this is
five months here at no point did it go below 30 and then decisively back up
above 30 and so you you can go literally for five months and to have lots of
chopping and lots of dips you could have bought it but you'll be missing out
alright and so it can be very boring and you could leave money on the table well
you might want to try as an alternative to the RSI the CCI commodity channel
index not just for commodities it's for stocks too and ETFs is it's very similar
as you can see it's just the numbers are different for this one if it goes down
below negative a hundred here that is oversold territory and then so
it's the same idea you want to go below the you know below negative 100 into
oversold territory and then back up decisively back up out of the oversold
reason oversold region back up above the negative 100 line here ok so as you can
see you know it almost does it here but not quite but then it clearly does it
here and so you could have had a buy signal here which is right here and then
it just went up and up and up quite nicely could have made a nice profit
there it did it again here went into the oversold region and then back up clearly
ok so you would have bought right around here and if you had held on you would
have done quite well alright and so the CCI on the standard settings will give
you more buy signals in many situations than the RSI ok
it can also give you false signals and by the way none of these are perfect
indicators you cannot rely on them a hundred percent you need to make your
own decision as to when to buy and you can use more than one indicator alright
so here's another one this is United Health Group UNH
and I put up both the RSI and the CCI again and as you can see we've gone
almost half a year in five months without any buy signals and there are
some nice tips here that you could have bought and here's a tip here's a tip
here's a tip all those were viable but the RSI on the standard setting and yes
you can change the setting that's one way or you can look at the CCI okay at
the twenty period which is the standard setting and look it told you to buy here
because it went into oversold and then came back up decisively clearly out of
oversold and you could have bought here all right right there and he would have
done well okay here it did it again he could have bought here and held on he
would have done well did it again here and if you had bought here when it came
back up out of the oversold region and held on you would you would have done
extremely well all right give you one more example I decided to
do a commodity or at least a commodity ETF this is IAU
which represents gold look at all these nice dips here
okay this works great in choppy markets alright and let's take a look at how the
RSI did it gave no clear buy signals if you are using the method that I'm
referring to where it has to go below and then back up above oversold
didn't do it here at all no clear signals whereas it worked beautifully
here you would have you could have bought here enjoyed a nice run up here
made a nice profit it could have bought here for a nice run up it does have a
false signal here okay it didn't work so great here you could have bought here
and then ya went up a little bit but then it went down okay so you could have
lost money there possibly you could have gotten stopped out if you had a stop
loss so as we can see it's not perfect but
then over here it worked great went back you know down here and then back up
above and you could have bought here for a nice run-up so three out of four not
bad all right and if you set your stops correctly and let your winners run then
you would have done quite well with this whereas with the RSI no buy signals
according to this method all right so check out the CCI in addition to or
instead of the RSI because it might just be better and it might be something you
never heard of until now and so I'm glad to help people discover these things all
right so if you like this video please give it a thumbs up on YouTube and
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want some help with technical indicators or putting together a trading or
investing plan because you really need to have one you can contact me at any
time my name is David Modell and my email address is David Modell at
gmail.com thank you so much for watching and listening I appreciate it very much
and I'll talk to you again soon
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