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How to Trade with Commodity Channel Index (CCI)

Commodity Channel Index (CCI) quick summary:

Commodity Channel Index is a versatile indicator. It is use to identify a new trend. Or warn of extreme conditions. Lambert  developed CCI to identify cyclical turns in commodities. This indicator successfully applied to indices similarly, ETFs, stocks and other securities. The CCI measures current price level relative to an average price level over a given period of time. Commodity indicator is relatively high, when prices are far above their average. This is relatively low when prices are far below their average. In this manner it can be used to identify overbought and oversold levels.

  • CCI measures the current price level relative to an average price level. Over a given period of time
  • So It can be used to identify overbought and oversold levels.
  • Above 100 level it’s overbought
  • If CCI above -100 level its oversold levels.

How to trade with CCI:

  • CCI to move above +100 to generate buy signals
  • Move below -100 to generate sell or short trade signals
  • Exit when the sell signals occurs and then re-invest when the buy signal occurs again
  • The strategy does not include a stop loss
  • When buying, a stop loss can be placed below the recent swing low;
  • Shorting when a stop loss can be placed above the recent swing high.
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About Dwipen Gogoi

Dwipen Gogoi, MBA (IB and IT) and PGDFT from Pune. (Technical Analyst of AliceBlue) I am a You Tuber, Blogger and doing Technical Analysis last 10 years in Stock, Commodity and Forex Market. i am creating various trading strategies for day traders, swing traders, scalp traders.

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