Section 5 Unit 3 encodes CCI. But the course has no further explanation about how to use it. It just dropped it out of nowhere.
Where and how does CCI fit in backtesting?
According to its brief explanation, this only exercise says that CCI values lie between -100 and 100. However, the exercise results display that some of the values lie out of this range.
How could this be possible?
Please explain. Thank you
Thank you for pointing it out.
The value of CCI depends on the lookback/time period. Smaller time period make CCI more volatile, so a lower percentage of CCI lies between -100 to +100. A longer time period will have a high percentage of CCI values between -100 to +100.