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:
Buying Rules For The CCI Forex Trading Strategy:
- 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.
- 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.
- 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.
Selling Rules Of The CCI Forex Trading Strategy
- 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.
- 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.
- Set your take profit target at 3 times what you risked.
So there you have it, the CCI Forex Trading Strategy .
Did you enjoy this? It would mean the world to me if you shared it with your friends by clicking those buttons below. Thanks