Commodity Channel Index (CCI) How to trade with CCI?

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What we will learn here

Different categories of Technical indicators

About CCI (General information)

How to use CCI our trades

Different settings and what is Best setting & try on live chart

Totally we can divide Technical indicators into 3 different categories:

Trend-following indicators: (some example)

I. Moving averages (both simple and exponential),

II. MACD (Moving Average Convergence Divergence),

III. Parabolic SAR,

IV. ADX (Average Directional Movement Index)

Momentum indicators: (some example)

I. Relative Strength Index (RSI),

II. Stochastics,

III. Commodity Channel Index (CCI)

Volatility indicators : (some example)

I. Bollinger Bands and

II. ATR (Average True Range)

About Commodity Channel Index – CCI

  The commodity channel index (CCI) is an oscillator originally introduced by Donald Lambert in 1980. This indicator identifying cyclical trends not only in commodities but also stocks and currencies and now it is one of the most common and useful indicators for traders in Financial markets. This Tool can be used for different time-frames by changing the averaging period. CCI is one of the most useful indicators for Traders who use Scalping Strategy, it is calculated as the difference between the typical price and its EMA (Simple Moving Average) divided by the mean absolute deviation of the typical price. As with most indicators, it is much better and helpful if you use it with other aspects of technical analysis.

CCI most often used to realize divergences from price trends as an overbought/oversold indicator. For scaling purposes, Lambert set the constant at 0.015 to ensure that approximately 70 to 80 percent of CCI values would fall between −100 and +100. The CCI fluctuates above and below zero. The percentage of CCI values that fall between +100 and −100 will depend on the number of periods used. A shorter CCI will be more volatile with a smaller percentage of values between +100 and −100. Conversely, the more periods used to calculate the CCI, the higher the percentage of values between +100 and −100. As you can see below, technically this is the way how this indicator works, however today we will talk about how we can use it and not going into mathematics calculation.

CCI helps identify price reversals, price extremes and trend strength

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