Commodity Channel Index Strategy - How to Use the CCI in Forex Trading

There are a number of ways to use the Commodity Channel Index , or CCI, as either the basis of, or an element of, a forex trading strategy. Although the name clearly indicates the CCI was originally developed for use in commodity futures trading, like nearly every other technical indicator, the CCI has been readily adopted by forex traders.

The CCI is an oscillator, an indicator primarily designed to help traders detect when a market is overbought or oversold, and is thus likely to see a reversal in direction and retracement.

The CCI essentially presents a calculation between current price, a moving average of price and standard or "normal" deviations from that moving average. The most straightforward use of the CCI to create a forex trading strategy is to simply trade accordingly when the CCI indicates overbought or oversold market conditions. Traders usually look at a trade like this as an opportunity to enter an ongoing trend at a favorable price.

Commodity Channel Index Definition | Forex Glossary by xelenew.web.fc2.com

In an uptrending market, they look for a retracement to the downside, and when the CCI reading indicates the market is extremely oversold, with a reading greater than , they then enter a buy trade, expecting the market to turn and resume its overall uptrend and hopefully move to new highs. For example, if the 1. That market condition makes it more likely the 1. The CCI can also be used purely for divergence trading. Using the CCI this way, a trader is not very concerned with the absolute value of the CCI reading but instead merely watches for divergence between market price and changes in the CCI reading.

Any instance when a market's price continues to rise higher, while the CCI reading moves down toward the negative, or end of its scale, is an indication of divergence, leading the trader to consider initiating a short position in the market. The CCI is a versatile enough technical trading indicator to allow it to be incorporated into a variety of forex trading strategies.

Dictionary Term Of The Day. A measure of what it costs an investment company to operate a mutual fund. Latest Videos PeerStreet Offers New Way to Bet on Housing New to Buying Bitcoin? This Mistake Could Cost You Guides Stock Basics Economics Basics Options Basics Exam Prep Series 7 Exam CFA Level 1 Series 65 Exam.

CCI Forex Floor Trader System

Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education. How do I use Commodity Channel Index CCI when creating a forex trading strategy? Maverick December 3, — 1: Use the commodity channel index to identify good, low-risk trading opportunities, and look at a variety of CCI technical Learn about some of the most basic trading strategies generated through the commodity channel index, a technical momentum Read about some of the primary differences between the relative strength index RSI and the commodity channel index CCI.

Learn how to calculate Doug Lambert's commodity channel index CCI along with its derivative indicator, the dual commodity See how traders and analysts use the DUAL Commodity Channel Index to spot divergences, breakouts and instances when the security Explore some of the most popular oscillators used to measure overbought conditions, both range-bound and unbound, and how We introduce how to use this oscillator, which identifies cyclical trends, for determining buy and sell points.

Use the Commodity Channel Index CCI to enter and exit price trends. Often in life, the right action is the hardest to take.

Discover how to get on the right side of a trend. Traders don't have to be solitary to be successful--discover how to connect with fellow traders and experts.

The Consumer Confidence Index is the result of a monthly survey of 5, U. We look at this closely watched economic indicator to see what it means and how it's calculated. Trading binary options is not for the novice, but if you're ready to delve in, get to know the best technical indicators. In forex trading, the specific value of a trader's account below An expense ratio is determined through an annual A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies.

A period of time in which all factors of production and costs are variable.

In the long run, firms are able to adjust all A legal agreement created by the courts between two parties who did not have a previous obligation to each other. A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation.

A statistical technique used to measure and quantify the level of financial risk within a firm or investment portfolio over Content Library Articles Terms Videos Guides Slideshows FAQs Calculators Chart Advisor Stock Analysis Stock Simulator FXtrader Exam Prep Quizzer Net Worth Calculator.

Work With Investopedia About Us Advertise With Us Write For Us Contact Us Careers. Get Free Newsletters Newsletters. All Rights Reserved Terms Of Use Privacy Policy.