Thursday, October 09, 2014 11:01:21 AM
Multicollinearity... Bollinger Bands... CCI...
Multicollinearity:
Understanding this is helpful...because you need to know what you're looking at: a Momentum indicator...a Trending indicator...and what the volume indicators are saying...so I need definitions of Momentum...Trending...Volume speaks volumes...
http://stockcharts.com/school/doku.php?id=chart_school:trading_strategies:multicollinearity
Multicollinearity is a statistical term for a problem that is common in technical analysis. That is, when one unknowingly uses the same type of information more than once. One needs to be careful and not utilize technical indicators that reveal the same type of information.
You're looking correct on the Bollinger Bands...Bollinger Bands are one and 2 and 3 standard deviations away from the "mean"=moving average... when price gets outside the 2 standard deviation (statistics say price is very likely to revert to the mean=Mean Reversion...goes back to centerline=the moving average...
What happened when PBR gets outside the 2 deviant line...?...it tends to go back to centerline and often it continues on to the other 2 deviant Band...so stock market players must be a bunch of YoYos...overbought to oversold to overbought===is a cycle...CCI is all about theses types of cycles...
CCI was originally made for trading futures and the way you play its signals = is you buy when price enters the overbought level and you sell when price enters the oversold level...price moves outside the overbought or oversold level and you stand aside...(thats scalping in my book...
CCI is a momentum indicator it is so close to the formular for the Bollinger Bands they really are the same...CCI has its oversold/overbought trigger lines of -100 and +100...CCI cycles excellently when you consider the Bollinger Bands "BOX PRICE Inside the Bands"..CCI tells you where you're at within those bands...(if you don't know where you're at...how are you going to know where you're going...?...CCI answers that...plus it points the direction...I want CYCLEs...I want Volatility within the parameters of the Volatility Bands...I want those CYCLES to be complete CYCLES=overbought to oversold to overbought...CCI gives definition to the cycle [/color]...the cycle for whatever reason could reverse at the centerline and go back where it came from...the cycle could also reverse at the one standard deviation and go back to where it came from...(in this definition the one and 2 standard deviation bands can be considered as better "Pivot Points then the way pivot points get calculated)...in any case centerline and the deviation band are trigger lines...and I also consider them more important then Fibonacci levels...
Bollinger Bands(volatility Bands) expand and contract=they expand as volatility increases and contract as volatility leaves the room...
So; I'm boxing price in with the Bollinger Bands and I rely on the CCI indicator...to "indicate" direction and signal changes in direction at overbought and oversold signal lines...+100 and -100...
You are now an expert on CCI and Volatility Bands...and you should know where you're at within them cycles...
Enjoy good Trades...
Multicollinearity... Bollinger Bands... CCI...
Multicollinearity:
Understanding this is helpful...because you need to know what you're looking at: a Momentum indicator...a Trending indicator...and what the volume indicators are saying...so I need definitions of Momentum...Trending...Volume speaks volumes...
http://stockcharts.com/school/doku.php?id=chart_school:trading_strategies:multicollinearity
Multicollinearity is a statistical term for a problem that is common in technical analysis. That is, when one unknowingly uses the same type of information more than once. One needs to be careful and not utilize technical indicators that reveal the same type of information.
You're looking correct on the Bollinger Bands...Bollinger Bands are one and 2 and 3 standard deviations away from the "mean"=moving average... when price gets outside the 2 standard deviation (statistics say price is very likely to revert to the mean=Mean Reversion...goes back to centerline=the moving average...
What happened when PBR gets outside the 2 deviant line...?...it tends to go back to centerline and often it continues on to the other 2 deviant Band...so stock market players must be a bunch of YoYos...overbought to oversold to overbought===is a cycle...CCI is all about theses types of cycles...
CCI was originally made for trading futures and the way you play its signals = is you buy when price enters the overbought level and you sell when price enters the oversold level...price moves outside the overbought or oversold level and you stand aside...(thats scalping in my book...
CCI is a momentum indicator it is so close to the formular for the Bollinger Bands they really are the same...CCI has its oversold/overbought trigger lines of -100 and +100...CCI cycles excellently when you consider the Bollinger Bands "BOX PRICE Inside the Bands"..CCI tells you where you're at within those bands...(if you don't know where you're at...how are you going to know where you're going...?...CCI answers that...plus it points the direction...I want CYCLEs...I want Volatility within the parameters of the Volatility Bands...I want those CYCLES to be complete CYCLES=overbought to oversold to overbought...CCI gives definition to the cycle [/color]...the cycle for whatever reason could reverse at the centerline and go back where it came from...the cycle could also reverse at the one standard deviation and go back to where it came from...(in this definition the one and 2 standard deviation bands can be considered as better "Pivot Points then the way pivot points get calculated)...in any case centerline and the deviation band are trigger lines...and I also consider them more important then Fibonacci levels...
Bollinger Bands(volatility Bands) expand and contract=they expand as volatility increases and contract as volatility leaves the room...
So; I'm boxing price in with the Bollinger Bands and I rely on the CCI indicator...to "indicate" direction and signal changes in direction at overbought and oversold signal lines...+100 and -100...
You are now an expert on CCI and Volatility Bands...and you should know where you're at within them cycles...
Enjoy good Trades...
Multicollinearity... Bollinger Bands... CCI...
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