Forex futures contracts31 comments
It can be used for all markets. The CCI is an indicator which oscillates back and forth, above and below zero. It can be used in multiple ways; here are two strategies that utilize it. When the CCI drops below a strong downtrend is in place, and therefore triggers a short sell put signal. The short trade is help until the CCI rallies back above Entries could also be used with binary options, although some testing and monitoring of volatility would be required to estimate the ideal expiry time for various financial instruments.
In the example above the strategy worked well, although it can be prone to triggering false signals. Therefore, there is another variation to the strategy. Some traders may prefer the simplicity of the first strategy and choose to make their own adjustments to it if they wish.
Other may prefer the next strategy which is a little more complex but may provide better entry points. The double time strategy uses two timeframes; a longer time frame to establish the trend and a shorter time frame to spot pullbacks.
A signal occurs on the 1-minute chart when the CCI moves below and then crosses back into positive territory zero line. We use the 1-minute chart to find pullbacks or oversold conditions in that longer-term trend. We then use those pullbacks to buy. When the CCI on the 1-minute chart moves below it indicates a pullback.
When the CCI on the 1-minute chart moves back above 0 zero line it indicates the pullback has ended and the trend is resuming. The entries using this strategy do fairly well at picking low points before the trend resumes. The entries are more favorable than using the basic strategy. Use the 1-minute chat to also exit trades. Exit when the 1-minute CCI moves below and the crosses back into positive territory crosses above zero line. You may wish to relax this, and take longs if the minute CCI is above 0.
Similarly, I originally said only take shorts if the 15 minute CCI is below If you find it prudent to do so, you may take wish to trade shorts as long as the 15 minute CCI is negative. This exposes a trader to potentially large losses on a quick move. Therefore it is recommended a trader employ some sort of stop loss order. For example, with longs place a stop just below a former swing low in price. For short, place a stop just below a former swing high in price. Test out the strategy before implementing it and come up with personal guidelines on how to employ the strategy if the concept of it appeals to you.
Figure 1 shows this basic strategy applied to a 5-minute stock chart. Figure 2 shows the same trading day in Apple, except using a 15 minute chart. To find the entry points we use a shorter time frame, such as a 1-minute chart. Figure 3 shows the entries into the longer-term uptrend using the 1-minute chart. Figure 4 shows the exits, marked with vertical on the price charts.