CCI Forex Trading Strategy-Learn to Trade Using The Commodity Channel Indicator

The CCI Forex Trading Strategy is based on this forex indicator called the  Commodity Channel Indicator (CCI).

A bit of history about the History and Its Uses: [sociallocker]

  • Commodity Channel Index (CCI) is an oscillator introduced by Donald Lambert in 1980.
  • Though its name refers to commodities, it can also be useful in equities and currency trading as well.
  • CCI measures the statistical variation from the average.
  • It is an unbounded oscillator that generally fluctuates between +100 and -100.

Here are some few important points you need to be familiar with:

  • When CCI is above +100 value, it is considered overbought while below the -100 value is considered oversold.
  • As with other overbought/oversold indicators, this means that there is a large probability that the price will correct to more representative levels.
  • Therefore, if values stretch outside of the above range, a retracement trader will wait for the cross back inside the range before initiating a position.

 

CCI FOREX TRADING STRATEGY RULES

Refer to this chart below for clarity about the trading rules of the CCI forex strategy  written further below:

CCI Forex Trading Strategy

Buying Rules For The CCI Forex  Trading Strategy:

  1. Watch and wait for CCI value to go below -100 (oversold region) and once it comes back and crosses above the -100 line to go up, you place a pending buy stop order 2-3 pips above the high of the candlestick after it has closed.
  2. Place you stop loss below the nearest swing low or if the candlesticks is quite long, then place it anywhere from 5-10 pips below the low of that candlestick.
  3. Your take profit target should be place at least more than 3 times what you risked. So say, if your stop loss is 30 pips then set your take profit at 90 pips.
READ  5EMA And 8EMA Forex Trading Strategy

Selling Rules Of The CCI Forex Trading Strategy

  1. Watch and wait for CCI Value to go above 100 (overbought region) and when the line comes down and crosses the +100 line to go down, then you place a pending sell stop order 2-3 pips below the low of the candlestick that was formed that caused the CCI value to fall below the +100 line.
  2. Then Place you stop loss at the nearest swing high or if the candlestick is quite long, then place it 5-10 pips above the high of that candlestick where you placed the sell stop order at.
  3. Set your take profit target at 3 times what you risked.

So there you have it, the CCI  Forex Trading Strategy

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