Ken Wood is a semi-famous trader that grew in popularity in the 1990s and early 2000s due to the establishment of one of the earliest trading forums online. This forum grew into "Woodie's Club" due to Wood's love of his modified ( ) that he used extensively. From what I can tell, the website is still active and still follows the same core principles it did in the early days, the is used for entries, range bars are used to help trader's cut down on the noise, and the optional addition of Woodie's can be used as further confirmation of . This is my take on his famous "Woodie's CCI" that has become standard on many charting packages through the years, including a TradingView sponsored version as one of the many stock indicators provided by TradingView. Woodie has updated his through the years to include several very cool additions outside of the standard . I will have to say, I am a bit biased, but I think this is hands down one of the best indicators I have ever used, and I am far too young to have been part of the original Club. Being a daytrader primarily, this fits right in my timeframe wheel house. Woodie designed this indicator to work on a day-trading time scale and he frequently uses this to trade and commodity contracts on the 30 minute, often even down to the one minute timeframe. This makes it unique in that it is probably one of the only daytrading-designed indicators out there that I am aware of that was not a popular indicator, like the or , that was just adopted by daytraders.
The was originally created by Donald Lambert in 1980. Over time, it has become an extremely popular house-hold indicator, like the Stochastics, , or . However, like the and Stochastics, there are extensive debates on how the is actually meant to be used. Some trade it like a reversal indicator, where values greater than 100 or less than -100 are considered overbought or oversold, respectively. Others trade it like a typical zero-line cross indicator, where once the value goes above or below the zero-line, a trade should be considered in that direction. Lastly, some treat it as strictly a , where values greater than 100 or less than -100 are seen as strong momentum moves and when these values are reached, a new strong trend is establishing in the direction of the move. The itself is nothing fancy , it just visualizes the distance of the closing price away from a user-defined value and plots it as a line. However, Woodie's takes this simple concept and adds to it with an indicator with 5 pieces to it designed to help the trader enter into the highest probability setups. Bear with me, it initially looks super complicated, but I promise it is pretty straight-forward and a fun indicator to use.
1) The Histogram. This is your standard value that you would find on the normal . Woodie's uses a value of 14 for most trades and a value of 20 when the timeframe is equal to or greater than 30minutes. I personally use this as a 20-period on all time frames, simply for the fact that the 20 is a very popular moving average and I want to know what the crowd is doing. This is your coloured histogram with 4 colours. A gray colouring is for any bars above or below the zero line for 1-4 bars. A yellow bar is a "trend bar", where the long period has been above/below the zero line for 5 consecutive bars, indicating that a trend in the current direction has been established. Blue bars above and red bars below are simply 6+n number of bars above or below the zero line confirming trend. These are used for the Zero-Line Reject Trade (explained below). The Histogram has a matching long-period line that is painted the same colour as the histogram, it is the same thing but is used just to outline the Histogram a bit better.
2) The Turbo line. This is a sped-up 6 period . This is to be used for the Zero-Line Reject trades, trendline breaks, and to identify shorter term overbought/oversold conditions against the main trend. This is coloured as the white line.
3) The Baseline ( ) Zero Line. You will notice that the Zero Line of the indicator is either green or red. This is based on when price is above or below the 25-period on the chart. The is a 25 period moving average and is one of the best moving averages out there because it is more immune to noise than a typical MA. Statistically, an is designed to find the line of best fit across the lookback periods and identify whether price is advancing, declining, or flat, without the whipsaw that other MAs can be privy to. The zero line of the indicator will turn green when the close candle is over the or red when it is below the . This is meant to be a confirmation tool only and the Histogram and Turbo Histogram can cross this zero line without any corresponding change in the colour of the zero line on that immediate candle.
4) The +100 and -100 lines are used in two ways. First, they can be used by the Histogram and Turbo as a sort of minor price resistance and if the values cannot get through these, it is considered weakness in that trade direction until they do so. You will notice that both of these lines are multi-coloured. They have been plotted with the ChopZone Indicator, another TradingView built-in indicator. The ChopZone is a trend identification tool that uses the slope and the direction of a 34-period to identify when price is trending or range bound. While there are ~10 different colours, the main two a trader needs to pay attention to are the turquoise/cyan blue, which indicates price is in an uptrend, and dark red, which indicates price is in a downtrend based on the slope and direction of the 34 . All other colours indicate "chop". These colours are used solely for the Zero-Line Reject and pattern trades discussed below. They are plotted both above and below so you can easily see the colouring no matter what side of the zero line the is on.
5) The +200 and -200 lines are also used in two ways. First, they are considered overbought/oversold levels where if price exceeds these lines then it has moved an extreme amount away from the average and is likely to experience a pullback shortly. This is more useful for the Histogram than the Turbo , in all honesty. You will also notice that these are coloured either red, green, or yellow. This is the Sidewinder indicator portion. The documentation on this is extremely sparse, only pointing to a "relationship between the and the 34 EMA" (see here: https://tlc.thinkorswim.com/center/refer...). Since I am not a member of Woodie's Club and never intend to be I took some liberty here and decided that the most likely relationship here was the slope of both moving averages. Therefore, the Sidewinder will be green when both the and the 34 are rising, red when both are falling, and yellow when they are not in agreement with one another (i.e. one rising/flat while the other is flat/falling). I am a big fan of Dr . Alexander Elder as those who follow me know, so consider this like Woodie's version of the Elder Impulse System. I will fully admit that this version of the Sidewinder is a guess and may not represent the real Sidewinder indicator, but it is next to impossible to find any information on this, so I apologize, but my version does do something useful anyways. This is also to be used only with the Zero-Line Reject trades. They are plotted both above and below so you can easily see the colouring no matter what side of the zero line the is on.
How to Trade It According to Woodie's Club:
Now that I have all of my components and history out of the way, this is what you all care about. I will only provide a brief overview of the trades in this system, but there are quite a few more detailed descriptions listed in the Woodie's Club pamphlet. I have had little success trading the "patterns" but they do exist and do work on occasion. I just prefer to trade with the flow of the markets rather than getting overly scalpy. If you are interested in these patterns, see the pamphlet here (https://www.trading-attitude.com/wp-cont...), hop into the forums and see for yourself, or check out a couple of the YouTube videos.
1) Zero line cross. As simple as any other momentum oscillator out there. When the long period crosses above or below the zero line open a trade in that direction. Extra confirmation can be had when the Turbo has already broken the +100/-100 line "resistance or support". Trend traders may wish to wait until the yellow "trend confirmation bar" has been printed.
2) Zero Line Reject. This is when the Turbo heads back down to the zero line and then bounces back in the same direction of the prevailing trend. These are fantastic continuation trades if you missed the initial entry either on the zero line cross or on the trend bar establishment. ZLR trades are only viable when you have the ChopZone indicator showing a trend (turquoise/cyan for uptrend, dark red for downtrend), the line is green for an uptrend or red for a downtrend, and the SideWinder is either green confirming the uptrend or red confirming the downtrend.
3) Hook From Extreme. This is the exact same as the Zero Line Reject trade, however, the Turbo now goes to the +100/-100 line (whichever is opposite the currently established trend) and then hooks back into the established trend direction. Ideally the HFE trade needs to have the Long Histogram above/below the corresponding 100 level and the Turbo both breaks the 100 level on the trend side and when it does break it has increased ~20 points from the previous value (i.e. Histogram = +150 with , CZ, and SW all matching up and trend bars printed on Histogram, Turbo went to -120 and bounced to +80 on last 2 bars, current bar closes with Turbo closing at +110).
4) . Either the Turbo or Histogram, whichever you prefer (I find the Turbo a bit more accurate since its a faster value) creates a series of higher highs/lows you can draw a linking them. When the line breaks the trendline that is your signal to take a counter trade position. For example, if the Turbo is making consistently higher lows and then breaks the trendline through the zero line, you can then go short. This is a good continuation trade.
5) The Tony Trade. Consider this like a combination zero line reject, , and weak zero line cross all in one. The idea is that the SW , CZ, and values are all established in one direction. The Histogram should be in an established trend and then cross the zero line but never break the 100 level on the new side as long as it has not printed more than 9 bars on the new side. If the Histogram prints 9 or less bars on the new side and then breaks the trendline and crosses back to the original trend side, that is your signal to take a reversal trade. This is best used in the Elder Triple Screen method (discussed in final section) as a failed dip or rip.
6) The GB100 Trade. This is a similar trade as the Tony Trade, however, the Histogram can break the 100 level on the new side but has to have made less than 6 bars on the new side. A is not necessary here either, it is more of a "pop and drop" or "momentum failure" trade trying in the new direction.
7) The Famir Trade. This is a failed Long Histogram ZLR trade and is quite complicated. I have never traded this but it is in the pamphlet. Essentially you have a typical ZLR reject (i.e. all components saying it is likely a long/short continuation trade), but the ZLR only stays around the 50 level, goes back to the trend side, fails there as well immediately after 1 bar and then rebreaks to the new side. This is important to be considered with the value matching the side of the trade, so if the Famir says to go long, you need the indicator to also say to go long.
8) The Vegas Trade. This is essentially a trend-reversal trade that takes into account the and a formation on the Long Histogram after it has reached an extreme value (+200/-200). You will see the Histogram hit the extreme value, head towards the zero line, and then sort of round out back in the direction of the extreme price. The low point where it reversed back in the direction of the extreme can be considered support or resistance on the and once the Long Histogram breaks this level again, with confirmation, you can take a counter trend trade with a stop under/over the highest/lowest point of the last 2 bars as you want to be out quickly if you are wrong without much damage but can get a huge win if you are right and add later to the position once a new trade has formed.
9) The Ghost Trade. This is nothing more than a(n) (inverse) pattern created on the . Draw a connecting the and trade a reversal trade once the Long Histogram breaks the . Same deal as the Vegas Trade, stop over/under the most recent 2 bar high/low and add later if it is a winner but cut quickly if it is a loser.
Like I said, this is a complicated system and could quite literally take years to master if you wanted to go into the patterns and master them. I prefer to trade it in a much simpler format, using the Elder Triple Screen System. First, since I am a day trader, I look to use the 20 period Woodie's on the hourly and look at the CZ, SW , and values to make sure they all match the direction of the Long Histogram (a trend establishment is not necessary here). It shows you the hourly trend as your "tide". I then drill down to the 15 minute time frame and use the Turbo break in the opposite direction of the trend as my "wave" and to indicate when there is a dip or rip against the main trend. Lastly, I drill down to a 3 minute time frame and enter when the Long Histogram turns back to match the main trend ("ripple") as long as the Turbo has broken the 100 level in the matched direction.
Enjoy, and please read the pamphlet if you have any questions about the patterns as they are not how I use these and will not be able to answer those questions.
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