Forex commodity channel index strategy
Donald Lambert created the CCI to measure the difference between the mean price of a currency and the average of the mean price over a chosen period of time. Traders use the index to determine overbought and oversold conditions and the beginnings and endings of cycles in the forex market. The CCI indicator is common on Metatrader4 trading software, and the calculation formula sequence involves these straightforward steps:.
The CCI indicator is composed of a single fluctuating curve. The principle behind the CCI is that cycles repeat.
Using the CCI Indicator to Find and Filter Trades
The weakness in the indicator is that cycles are often difficult to determine in the forex market. When the cycle of the underlying currency changes, the CCI can generate false signals or a succession of signals that are inconclusive, as in the first portion of the above chart.
It is prudent to complement the CCI with another indicator.
The next article in this series on the CCI indicator will discuss how this oscillator is used in forex nifty eod options data and how to read the forex commodity channel index strategy graphical signals that are generated.
Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit.
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World's best forex deals and strategy. Commodity Channel Index Indicator Explained — What is the CCI Indicator?
CCI Formula The CCI indicator is common on Metatrader4 trading software, and the calculation formula sequence involves these straightforward steps: Sign Up Free Demo.