Filtering CCI Signals with a Step Chart and Price Averages
Summary
The document describes a Commodity Channel Index variation intended to reduce the number of indicator signals. It applies a step-chart filter to the calculated CCI: users choose a minimum change in CCI units, and smaller moves are not represented as meaningful step changes. Changes in the step-bar color can then be used as signals. The step size is a configurable sensitivity setting, so it affects how much movement is required before the plotted state changes.
A second optional filter smooths price before calculating CCI. The listed choices are simple, exponential, smoothed, and linear-weighted moving averages; setting the averaging period to one or less disables this price filter. The text presents this as a way to filter both the input prices and the resulting CCI, but gives no parameter guidance, market-specific rules, backtest, or performance evidence. Smoothing and step thresholds may reduce some fluctuations while also delaying signals or suppressing useful moves, so the approach needs testing under the intended market and timeframe.
Key ideas
- The indicator uses a minimum CCI change to form step-like values and filter smaller fluctuations.
- Changes in the step bar’s color are proposed as trading signals.
- Price can be smoothed before CCI calculation with one of four moving-average types.
- An averaging period of one or less disables the price-smoothing stage.
- The document provides no backtest or evidence that the filters improve trading outcomes.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.