*A boring afternoon while I wait for Missus to come home from work.
There has been some talk of indicator trading and enthusiasm for same, especially in the "Daytrading" thread where there has been an emphasis on the Commodity Channel Index (CCI). CCI has also been popularized by Ken Wood (Woodie) where he has developed non-traditional interpretations of CCI patterns. www.woodiescciclub.com
I'm a big believer in "deconstructing" indicators to see what they are measuring, what they are REALLY saying about price movement so I thought I'd go through CCI first.
OK, building the indicator from scratch; let's say we are constructing a 20 day CCI. The first thing is the find the daily pivot point (i.e. (High + Low + Close)/3 ). Next we find the 20 day simple moving average of the daily pivot point. I'll plot these on a chart as we go along.