Hi Northam...I understand completely the strategy you are following...I think essentially the VTO system, with going long below 30 on the RSI(5), in 1/3 increments,..adding thirds if the RSI drops below the previous day, until you are fully invested.
Your exit strategy for a profit is to wait for the RSI 70 level, rather than exiting above the 50 level, as VTO does..because you correctly recognize that there are often good profits left on the table, if you exit at 50.
That is a good strategy...it is obvious is works, and it is obvious that it works for you...continued good wishes in that strategy.
This is the point of my post:
I have wondered for a couple years (or as long as I've watched the VTO system........Why someone didn't propose a similar strategy using the CCI(20) instead of the RSI??
There is an advantage, I believe in doing so....The RSI is bound at limits of zero and 100.....as the RSI begins to reach that asymptote, it becomes less able to move to respond to the price action...It ends up essentially going sideways (maxed or mined out)...in an overbought or oversold condition.
The CCI has no such restriction...it will continue to show more positive or more negative numbers as the price demands.
The first OB/OS level would be +/- 100...and moves to +/- 200, and +/- 300 would justify adding to the position. I might add that it is rare indeed, that a move through zero does not continue to at least the +/- 100 level.
It may be that you, or everyone else, is comfortable with the RSI, but the imposed boundaries bother me a bit...the openess of the CCI seems more appealing.
I use the CCI in a different way, but it seems preferable to me in a VTO type strategy, for the reasons articulated.
regards.
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