All StrategiesForex StrategiesIndicator Strategies
How the pros trade using theCCI trading systemis very easy to understand. In this article, you will also learn about the CCI indicator and why it is useful in your trading. If you want to break from the crowd mentality and join the professional traders then what youre about to learn next will grab your interest. Long-term profitability demands different types of trading skills that ourCCI trading strategy PDFwill reveal it to you next. You can also readTrend Line Drawing with Fractals.
One of the fundamental trading principles that our team atTrading Strategy Guidesreligiously follows is to trade in the direction of the dominant energy of the market. This is really important, so make sure you commit this to memory.
But how we determine the dominant energy of the market?
Thats where theCCI indicator strategycomes in and the price action as well.
Moving forward, were going to talk about the CCI indicator also known as the Commodity Channel Index; well explain the theory behind CCI, and then highlight some real trade examples to show you how the CCI works. We also have training onhow to use currency strength for trading success.
As you may guess by now, the only indicator you need to spot new market cycles is the CCI indicator.
The CCI indicator was created by Donald Lambert and was initially used to identify cycles in the commodity market. However, it tends to perform the same in the stock market or the Forex currency market and even the cryptocurrency market for that matter.
TheCCI indicator strategywas really designed to find cyclical trends in the market and to be used as a bearish or bullish filter. The CCI is simply an oscillator indicator that moves the majority of the time between +100 and -100.
Technically, the way to interpret the Commodity Channel indicator is that a positive reading above +100 is a bullish signal and a start of an uptrend, while a negative reading below -100 is a bearish signal.
You have to keep in mind that technical indicators are just mathematical equations. However, the CCI is a leading indicator which means it doesnt lag behind the price
A good trading tip on how to use the CCI indicator is in conjunction with chart analysis, which is the central theme of this CCI trading strategy PDF. Here is anapproach to currencies by Warren Buffett.
Now, here is the way were going to use the CCI trading strategy PDF:
The CCI trading system doesnt look for overbought and oversold signals. You have to understand that when were above +100 CCI reading that is actually showing strength. In other words, the dominant market energy is to the upside.
Now, before we go any further, we always recommend taking a piece of paper and a pen and note down the rules of this entry method. Also, readtrading disciplinewhich is also a most important skill for successful trading.
For this article, were going to look at the buy side.
When we get a CCI reading above the +100 level, that shows statistically the EUR/USD gained more strength than average and therefore great for buying opportunities.
As a leading indicator, the Commodity Channel indicator can provide us with excellent great trade signals.
When the CCI crosses for the first time above the +100 level thats the signal that a new bullish trend is about to start or at least a rally will emerge from where you can extract sound profits.
There is one more trading condition that needs to be satisfied before pulling the trigger.
Waiting for a pullback in price is a more defensive trading approach. However, you can also buy right away when the CCI crosses above +100. In this case, you need to make sure enough time has elapsed between now and the last time the CCI passed above +100.
Were going to apply the more conservative approach and wait for a retracement and the CCI indicator to hold above the zero line during this retracement.
We want to see a weak retrace in the CCI indicator that barely goes below the +100 level, but at the same time, we need to look at the price action retracing more than the CCI did.
We want to have strength to the upside if were going to buy EUR/USD and we want to see continued strength in the CCI reading when the price ispulling back.
When the retracement happens, its important for the CCI indicator to remain above the zero line. If the CCI crosses below the zero line during the retracement, were no longer interested in going long EUR/USD.
This is one perfect example of how to filter bad trades from the right trades.
Note* The less the CCI turns down, the more powerful the rally should be.
The next step will highlight the trigger for our entry order.
We either buy after we have seen the market pulling back over the last 3-5 candles or we buy straight away if we have sharp corrections.
The natural ebb and flow of the market are given by these short-term pullbacks that were going to use to trigger our entry.
If the retrace was weak, it means the dominant energy of the market remains up. The CCI indicator strategy reflects quite well what is happening behind the scene where the actual buying and selling pressure takes place.
This brings us to the next important thing that we need to establish for the CCI trading strategy, which is where to place our protective stop loss.
Were proposing a very easy strategy to manage your stop loss. Simply place your protective stop loss below the most recent swing low.
However, its important to also watch the CCI indicator for further clues of weakness, and if the CCI crosses below the -100 level after youve entered the market, you can close the trade at the market price if your stop loss wasnt triggered in the process.
Last but not least, we also need to define where we take profits when trading with the Commodity Channel Index indicator.
We have two trading tactics to implement when dealing with exits.
The more profitable exit strategy is to take profits when the CCI touches the +200 level. However, since the market will only occasionally give us such big trading opportunities we need to have a backup plan.
As soon as the CCI indicator turns below the zero level, we want to exit our trade. The first sign that the rally is running out of steam is when the CCI indicator crosses below the zero line.
Note** the above was an example of a BUY trade using our CCI trading strategy PDF. Use the same rules for a SELL trade but in reverse. In the figure below, you can see an actual SELL trade example.
The overarching principles of the CCI strategy can be applied to your own trading strategy as well. All markets move in cycles, so we recommend using the CCI indicator in combination with higher time frames as this will yield better trading performance according to ourbacktestingresults.
If you got value from the CCI trading strategy PDF, please dont be shy to share it with others. It feels good to do the right thing, so go ahead and do the right thing and youll have your heart filled with joy.
Please leave a comment below if you have any questions about thisCCI trading strategy PDF!
Also, please give this strategy a 5 star if you enjoyed it!
Please Share this Trading Strategy Below and keep it for your own personal use! Thanks Traders!
With over 50+ years of combined trading experience, Trading Strategy Guides offers trading guides and resources to educate traders in all walks of life and motivations. We specialize in teaching traders of all skill levels how to trade stocks, options, forex, cryptocurrencies, commodities, and more. We provide content for over 100,000+ active followers and over 2,500+ members. Our mission is to address the lack of good information for market traders and to simplify trading education by giving readers a detailed plan with step-by-step rules to follow.
Fundamental Analysis of Stocks 5 Financial Ratios to Follow
Options Spread Strategies How to Win in Any Market
Algorithmic Trading Strategies The Complete Guide
Futures Trading Strategies (Trading Futures for Dummies)
Introduction to Derivatives Trading Guide to Financial Derivatives
Initial Coin Offerings A Multi-Billion Industry (Hot ICO List 2019)
Best Cryptocurrency to Invest in 2019 Our Top 4 Picks
Day Trading Cryptocurrency How To Make $500/Day with Consistency
How to Trade With Exponential Moving Average Strategy
The Best Bitcoin Trading Strategy – 5 Simple Steps (Updated)
Using Volume Trading Strategy to Win 77% of Trades
816 Ligonier Street 405 Latrobe, PA 15650(724)
Disclaimer: Trading carries a high level of risk, and may not be suitable for all investors. Before deciding to invest you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.>