The Commodity Selection Index (CSI) has initially been developed for stock trading, where it was used to find objects with the highest profit potential for the short-term. The CSI Indicator was first introduced in the book “New Concepts in Technical Trading System” by Wells Wilder.
CSI combines 4 factors, which determine the best commodity for trading. CSI suggests that the best things are:
- High in directional movement (DMI indicator value)
- High volatility (volatility index value and ATR)
- Proper margin requirements (relative to directional movement and volatility)
- The appropriate commission rate
How to trade with CSI
Wilder’s approach is to trade with high CSI values (relative to other objects). A high CSI rating indicates that there is strong volatility characteristics in the commodity and is trending. Such commodities with high CSI ratings are very volatile and have the potential to earn the fastest profits in the shortest possible time.