Reviewing Commodity Channel Index Technical indicator

CCI or commodity channel index is an oscillator that measure between +100 and -100. It is used to determine oversold (-100) and overbought (+100). It is actually a relationship between simple moving average and normal deviations from mean.

CCI = (currency price - moving average(yy) ) / (0.015 x Mean Deviation)

where yy is the period define for measuring moving average

MT4 already have CCI built in as a customer indicator for you to use in your metaeditor programming.




Below are some ways to trade CCI (14) blue colour chart, with SMA (14) red line.

1) Trade CCI when there is a up/down trend
At oversold (-100) condition and SMA is decreasing by 5 pips, execute a buy trade. Or at overbought condition and SMA is increasing by 5 pips, execute a sell trade.
eg a sell trade will execute on 12 Nov at 1.5879 and profit take at 1.5839 (40 pips stop loss and 40 pips take profit). and another sell trade on 12 Nov at 1.5787 and take profit at 1.5747 (40 pips win).

2) Trade CCI when CCI slope is same as SMA slope
Both slop have to be 5 pips and in same direction.
eg. there will be a sell trade on 12, 13 and 14 Nov. And a buy trade on 11 Nov
with stop loss 40 pips and take profit at 40 pips.

3) Trade when price fall below raising SMA and CCI more then 50.
This will execute a trending up currency price movement. When SMA is increasing and CCI is more then positive 50, when currency price drop below SMA, execute a buy trade.
eg. a buy trade will execute on 11 Nov 1915hrs at 1.5875 and take profit at 1.5915 few hours later.
For sell trade will be SMA decreasing and CCI less then -50 and when currency price goes above SMA.
eg. a sell trade will execute on 12 Nov 1415hrs at 1.58330 and take profit few hours later at 1.57930 (40 pips stop loss and 40 pips profit take). Another sell trade at 13 Nov 1615hours at 1.57410 and take profit few hours later at 1.5701

Above are some example, you can include other technical to re-enforce the strategy to make it more profitable.




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