The different between RSI and CCI - Platforms and Indicators | futures io social day trading
futures io futures trading


The different between RSI and CCI
Updated: Views / Replies:3,400 / 7
Created: by liorzuk Attachments:2

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 
Thread Tools Search this Thread
 

The different between RSI and CCI

  #1 (permalink)
LIOR
Israel
 
Futures Experience: Beginner
Platform: NinjaTrader
Favorite Futures: es
 
Posts: 72 since May 2013
Thanks: 43 given, 19 received

The different between RSI and CCI

Hello everybody

I want to ask what is the main different between the RSI and the CCI indicators

Reply With Quote
 
  #2 (permalink)
Quick Summary
Quick Summary Post

Quick Summary is created and edited by users like you... Add FAQ's, Links and other Relevant Information by clicking the edit button in the lower right hand corner of this message.

 
  #3 (permalink)
Elite Member
Berlin, Europe
 
Futures Experience: Advanced
Platform: NinjaTrader, MultiCharts
Broker/Data: Interactive Brokers
Favorite Futures: Keyboard
 
Fat Tails's Avatar
 
Posts: 9,653 since Mar 2010
Thanks: 4,226 given, 25,602 received
Forum Reputation: Legendary

Answer
This post has been selected as an answer to the original posters question Answer



liorzuk View Post
Hello everybody

I want to ask what is the main different between the RSI and the CCI indicators


Funny question. What is the difference between an elephant and a hippopotamus?


Elephant and hippopotamus are both mammals. They belong to the same category of animals.

In a similar way RSI and CCI are both normalized momentum oscillators. They belong to the same category of indicators.

They show you the relative momentum over the selected lookback period, where the relative momentum is being processed through a mathematical formula.

A momentum oscillator has a negative value when the momentum points down, it has a positive value when the momentum points up.

A normalized momentum oscillator uses a scale which does neither depend on the instrument nor on the time frame.

A well coded normalized momentum oscillator should pass the coherency test (known as C-test) suggested my trader and mathematician William Eckhard.

In fact, both RSI and CCI pass the C-test without any problems, see chart below.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).



Now let us come to the differences.

The RSI uses a scale from 0 to 100. There is no value possible outside this scale. Mathematically this is achieved by summing up the close-to-close changes for positive days and for negative days. The sum of the positives is then divided by the total sum of positives and negatives. The sum of the positives is always a fraction between 0 and 1 of the total sum, therefore the indicator will always show a value between 0 and 100.

The CCI looks at the distance of price from a moving average calculated from the typical price, and then divides that figure by the mean absolute deviation of the data points over the lookback period. Afterwards the result is multiplied with a scaling factor of 1/0.015. This mathematical formula does not impose an absolute scale, but the division by the mean absolute deviation is good enough to make the indicator scale independent from selected instrument and time frame, and it therefore passes the C-test. Let us assume that the lookback period of the CCI is 14. In that case the distance of price from the SMA cannot be larger than 14 times the mean absolute deviation, and therefore the theoretical maximum that the CCI may take is 14/0.015 = 933.33. The scale is indeed limited, but the maximum and minimum values depend on the lookback period. However, most of the time the CCI will not go above 250 or below - 250.

The CCI is defined in a very strange way. The first thing that is astounding is that it does not used the standard deviation but the mean absolute deviation for normalizing the values. The second strange thing is the arbitrary scaling factor 1/0.015 = 66.67, which has been selected to improve the readability of the results.

It is much easier to use the z score (z stands for the normal distribution) instead of the CCI. The z score also measures the distance of a data point from the mean, but then divides it by the standard deivation of the population. If any scaling factor is added it should be 100. This would also make it easy to detect 3-sigma, 4-sigma or 5-sigma events, which have a known probability for the normal distribution.


Attached is a chart comparing Z-Score to CCI. It shows that both indicators pass the C-test, but that the z score has a superior ability to handle outliers, as it has an ability to dampen the impact of extreme values.


Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).

Reply With Quote
The following 11 users say Thank You to Fat Tails for this post:
 
  #4 (permalink)
Banned: trolling
NYC + NY / USA
 
Futures Experience: Advanced
Platform: "I trade, therefore, I AM!"; Theme Song: "Atomic Dog!"
Favorite Futures: EMD, 6J, ZB
 
kronie's Avatar
 
Posts: 798 since Oct 2009
Thanks: 216 given, 498 received

Williams RSI had been color coded, for well over 10+ years, and was deadly accurate to a fault, until too many traders started using it, and too many analysts started making it more publically aware.

CCI was made widely popular by the likes of Ken Wood, popularly known as Woodies' CCI.

Given the exposure, customization and moving away from center, or what the momentum indicators originally were designed for, @Fattails, how would you comments on how these two indicators have been used, with respect to which is more effective to utilize, or more consistent in reliable trading results?

From what I have learned, the CCI is far more accurate on long term charts and almost worthless on short term, intra-hour charts. Equally, from what I have learned, the RSI is highly useful and remains so, with intra-hour charts, and only coincidently accurate on longer term charts.

Reply With Quote
 
  #5 (permalink)
Trading Apprentice
bangkok
 
Futures Experience: Intermediate
Platform: TradeStation
Favorite Futures: es
 
Posts: 16 since Dec 2013
Thanks: 17 given, 12 received


kronie View Post
..... RSI is highly useful and remains so, with intra-hour charts, and only coincidently accurate on longer term charts.

Wilder will certainly disagree with that statement. Infact the first sentence of his book with regards to the Relative strength index says: Rsi is a tool which can add a new dimension to chart interpretation when plotted in conjunction with a daily bar chart.

Reply With Quote
 
  #6 (permalink)
Elite Member
Berlin, Europe
 
Futures Experience: Advanced
Platform: NinjaTrader, MultiCharts
Broker/Data: Interactive Brokers
Favorite Futures: Keyboard
 
Fat Tails's Avatar
 
Posts: 9,653 since Mar 2010
Thanks: 4,226 given, 25,602 received
Forum Reputation: Legendary


kronie View Post
Williams RSI had been color coded, for well over 10+ years, and was deadly accurate to a fault, until too many traders started using it, and too many analysts started making it more publically aware.

CCI was made widely popular by the likes of Ken Wood, popularly known as Woodies' CCI.

Given the exposure, customization and moving away from center, or what the momentum indicators originally were designed for, @Fattails, how would you comments on how these two indicators have been used, with respect to which is more effective to utilize, or more consistent in reliable trading results?

From what I have learned, the CCI is far more accurate on long term charts and almost worthless on short term, intra-hour charts. Equally, from what I have learned, the RSI is highly useful and remains so, with intra-hour charts, and only coincidently accurate on longer term charts.


@kronie: I do not know any Williams RSI. There is a Williams %R which is a variation of the Stochastics. It just uses a different scale and is otherwise identical. The scale of the Stochastics is more convenient, therefore I have never used the Williams %R.

The CCI was developed by Donald Lambert and first published in Commodities Magazine in 1980. A reprint was published in July 1983 and is available in the archives of Technical Analysis of STOCKS & COMMODITIES Magazine - THE TRADERS' MAGAZINE. Woody made it more popular adding ghosts and the like.

None of the oscillators is accurate, none of them is worthless. I do not see any particular reason that a CCI would work better on daily charts compared to a RSI or vice-versa.

Reply With Quote
The following 2 users say Thank You to Fat Tails for this post:
 
  #7 (permalink)
Banned: trolling
NYC + NY / USA
 
Futures Experience: Advanced
Platform: "I trade, therefore, I AM!"; Theme Song: "Atomic Dog!"
Favorite Futures: EMD, 6J, ZB
 
kronie's Avatar
 
Posts: 798 since Oct 2009
Thanks: 216 given, 498 received


Fat Tails View Post
@kronie: I do not know any Williams RSI. There is a Williams %R which is a variation of the Stochastics. It just uses a different scale and is otherwise identical. The scale of the Stochastics is more convenient, therefore I have never used the Williams %R.

The CCI was developed by Donald Lambert and first published in Commodities Magazine in 1980. A reprint was published in July 1983 and is available in the archives of Technical Analysis of STOCKS & COMMODITIES Magazine - THE TRADERS' MAGAZINE. Woody made it more popular adding ghosts and the like.

None of the oscillators is accurate, none of them is worthless. I do not see any particular reason that a CCI would work better on daily charts compared to a RSI or vice-versa.

I stand corrected, and no shame or embarrassment warranted either. Williams %R, thanks for clarifying that.

I find it interesting that oscillators, are accurate or worthless. What did you mean by that? Generally speaking the type of intraday trading that most of us discuss and need on these threads, are short term in nature, hence we curve fit towards the sub-one-minute (whether in renko, vol-bars, candles or otherwise) to the sub-hour intervals, hence the need for oscillators and momentum indicators that are sensitive enough to predict or report accurately (as close to realtime as possible, with minimal lag), what the smoothed average of prices are doing, or have just completed.

When doing longer-term analysis, beyond an hour, and towards the four hour blocks and daily / weekly bars, just about every indicator (which mathematically represent some smoothed form of an rolling average sampling) will be as accurate as that interval in predictive analysis. Hence, when a crossover of moving average lines on a 4hour bar shows, then its likely that further separation from those crossing points will continue in same direction in the next 4hour bar. Even when that is not the case, at least the person reading the chart is able to do a 50-50 analysis of what might occur next.

Reply With Quote
 
  #8 (permalink)
Membership Temporarily Revoked
Calgary Alberta/Canada
 
Futures Experience: Advanced
Platform: TDWaterhouse
Favorite Futures: stocks (long term)
 
Posts: 934 since Feb 2014
Thanks: 180 given, 777 received


kronie View Post
I stand corrected, and no shame or embarrassment warranted either. Williams %R, thanks for clarifying that.

I find it interesting that oscillators, are accurate or worthless. What did you mean by that? Generally speaking the type of intraday trading that most of us discuss and need on these threads, are short term in nature, hence we curve fit towards the sub-one-minute (whether in renko, vol-bars, candles or otherwise) to the sub-hour intervals, hence the need for oscillators and momentum indicators that are sensitive enough to predict or report accurately (as close to realtime as possible, with minimal lag), what the smoothed average of prices are doing, or have just completed.

When doing longer-term analysis, beyond an hour, and towards the four hour blocks and daily / weekly bars, just about every indicator (which mathematically represent some smoothed form of an rolling average sampling) will be as accurate as that interval in predictive analysis. Hence, when a crossover of moving average lines on a 4hour bar shows, then its likely that further separation from those crossing points will continue in same direction in the next 4hour bar. Even when that is not the case, at least the person reading the chart is able to do a 50-50 analysis of what might occur next.

I see the word "Accuracy" batted around in this thread and I think you should clarify what is meant when you use such a term.

Indicators... to me anyway means "showing signs of"... not "this is a message from above".... there is no silver bullet when it comes to indicators...be it RSI, CCI or others.

Sometimes individually they show the way to riches.... sometimes they lead you down the garden path.

I use Indicators a lot. If you check out my journals you will find indicators form the cornerstone of my trading strategy. But do I make my decisions based on a single indicator....not on your life. They will all give misleading information or sometimes outright false directions....But if you choose a suite of indicators and draw a consensus from their indications...then you can get a pretty reasonable idea about what may happen.

All indicators are misleading....but they are not so insync with eachother... arriving at a consensus is possible.

This is also my objection to trading platforms that do the analysis for you.... the idiot light systems. I smile when as I heard on one presentation when they ran down indicators because they represent the past...but they have a forecasting system... based on what??? Historical data... is that not the past??? My objection to those systems is that you do not know (and they won't tell you) how those indicators (yes they use them) are interpreted.... usually they are based on nothing more than traditional settings IMHO.

And another thing.... let us say we have two RSI readings on separate charts. One chart has a RSI of 45 and another chart has a RSI of 55.... which RSI is the most bullish????

Answer: You don't know without more information about the RSI readings. The chart with an RSI of 45 could be the most bullish if the trend of the RSI was positive (the greater the +ve slope of the trend the more bullish it is becoming) and the chart with the RSI of 55 could be VERY BEARISH if the trend of that chart's RSI is negative (again the higher the -ve slope the more bearish it will be)

How many times have you heard a stock is "over-sold" and less than 30.... this makes it a buy??? Hockey pucks NO!!!... sure it might turn around and climb out of the mud .... but it might take months to do so. Similarly, the RSI is "over-bought" and over 70.... time to sell??? You are foolish IMHO if you do... it could remain there for months and you would lose a lot of profit potential.

Paying attention to only single numbers for any indicator is a recipe for losing money. At the very least, pay attention to the trend of that indicator, no matter what it is.

You really up your game when you start developing a consensus with a suite of non-similar indicators (eg. don't choose TRIX and MACD as they give you a similar look).... only then will you find indicators really useful.

There is no such thing as "accuracy" with indicators...it has no meaning... all indicators are accurate as far as the number that is calculated... most formulae are pretty simple but that means nothing in the interpretation of them.

Reply With Quote
The following 4 users say Thank You to Underexposed for this post:

Reply



futures io > > > The different between RSI and CCI

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Jigsaw Trading: TBA

Elite only

FuturesTrader71: TBA

Elite only

NinjaTrader: TBA

Jan 18

RandBots: TBA

Jan 23

GFF Brokers & CME Group: Futures & Bitcoin

Elite only

Adam Grimes: TBA

Elite only

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
CCI Average kitums NinjaTrader 4 July 13th, 2016 12:35 PM
MACD, RSI, CCI indicators with different time frames, coding help? hector24 NinjaTrader 11 February 29th, 2016 11:09 AM
[REQ] CCI, RSI labels indicator for TOS rommark ThinkOrSwim 0 September 29th, 2014 07:42 PM
CCI by Sharky (super CCI) 5emm Platforms and Indicators 5 December 25th, 2013 04:48 PM
CCI Modification chunjr NinjaTrader Programming 3 February 17th, 2011 08:40 PM


All times are GMT -4. The time now is 12:58 PM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-18 in 0.19 seconds with 34 queries on phoenix via your IP 54.196.201.241