Best Commodity Channel Index CCI Trading Strategy | Forex CFD Trading


Hello guys, in this video i will reveal an
effective trading strategy involving the commodity channel index, strategy which i mainly used
when I’m trading stocks. The CCI is an oscillator used in technical
analysis in order to measure the variation of a stock’s price from its statistical
mean. High values indicate that prices are unusually
high compared to average prices. Low values of the CCI indicate that prices
are unusually low. CCI is one of the most popular indicators
and traders always tweak the settings of the indicator, depending on their favorite time
frame or trading style. Most of them use the standard settings, CCI
set on a 21 period. CCI of 14-period and 50-period are also popular
among traders. Our CCI trading strategy involves 3 conditions
to be met. Here’s the first condition: the CCI must
reach overbought or oversold conditions twice. Commodity channel index is used by many people
in a wrong way. When the CCI technical indicator hits or exceeds
values above -100 or 100, many traders interpret this as a signal to enter counter trend positions,
in response to overbought and oversold conditions on the market. But sometimes the prices can stay a long time
in the overbought or oversold areas and during that time they can continue to go higher or
lower. That’s why we need the CCI to reach overbought
or oversold conditions twice. Also, we will use values of 200 and -200 for
these levels, to eliminate most of the noise. In this NVidia chart, observe the CCI reaching
oversold conditions twice, respectively -200 level. Here’s the same condition met on an exon
mobile chart. The CCI reached -200 level once, and another
time 2 weeks after. Most people would have taken a long signal
the first time the CCI reached oversold conditions, but this is a sure way to lose money on the
long run. It’s better to be conservative and wait
for the second move in oversold territory. But this isn’t enough. We need something else to happen on our charts. Here’s our second condition. We need a regular divergence between the CCI
and the price. A regular divergence is characterized by higher
high prices and lower CCI indicator values during an uptrend and lower low prices plus
by higher CCI values, during a downtrend. Most novice traders search for CCI divergences
on the charts and automatically interpret this as a valid signal to enter the market. Just because a CCI divergence appears on a
chart, that doesn’t mean that you should automatically enter a reverse position. So, we need the CCI to reach -200 or 200 level,
but it also has to form a divergence. In this Verizon Communication chart, we spot
a regular divergence on the CCI, but we also take into account the first condition, respectively
the indicator must reach the -200 level. Here’s the same 2 conditions met on an AT&T
chart. The CCI reached the -200 level and formed
a regular divergence. By now, I’m sure you noticed that i only
showed examples with the CCI in oversold conditions and none of the examples were on the overbought
side. This is because when I’m trading stocks
I’m comfortable to trade only long positions, on stocks with good fundamentals (mainly dividend
stocks or growth stocks), so i intentionally look only for long signals. To increase your chances when trading this
strategy, it’s good to have fundamentals on your side. I use a stock screener to keep an eye on the
stocks to trade. Stock screeners make a trader’s life a lot
simpler than the old days. You still have to do your homework, but you
can set screens to create your watch list based on your conditions and it’s going
to save you a lot of time, especially if you’re monitoring hundreds or thousands of stocks. With a stock screener, you have a big advantage. I’ve put several stock screeners in the
description, if you want both technical and fundamental indicators on your side with this
strategy, check them out. Like i said before, you could take signals
when the CCI reaches overbought conditions, like this one on the Netflix chart, but from
my experience, the most profitable trades are buy entries on stocks with good fundamentals. This trade for example, would have brought
some profits eventually, but not without a period of consolidation. So, take my advice and look only on the lower
side of the CCI and ignore overbought signals. Now, for the third conditions, we want to
see a clear trend line break in order to enter the market. We want to see the CCI reaching -200 level,
we want a divergence between the CCI and the price, but we also want a trend line break,
to confirm the switch in momentum. Let’s see all the conditions met on the
Netflix stock. First, the CCI reaching oversold condition
twice. Then we see the regular divergence. After that, we simply wait for a trend line
breakout. After the price consolidated above the trend
line, we can safely enter long on the market. The same pattern on Walt Disney stock. The stock price reached oversold levels twice,
the CCI indicator formed a divergence followed by a trend line breakout. As you can see, we did experienced some heat,
because the price consolidated for a while and retested the previous low, before it finally
took off. So, don’t expect a sweet ride all the time,
we just have to put out stop orders accordingly and follow our initial plan. Here is the IBM stock. Here’s the -200 level hit twice, the divergence
and the trend line breakout. Don’t be afraid to enter the market when
you see the CCI reaching overbought conditions because this is a classic beginner mistake. Another great trade on the visa stock. By now, i hope you trained your eyes to spot
for this CCI pattern. The oversold level hit twice, the regular
divergence and also the trend line break. You might wonder why we have to wait for the
breakout to enter the market. In this example, if we could have entered
way sooner and obtained bigger profits. But you see, this was a fortunate case, many
times the market decides to search for lower lows and go for the third time in oversold
area. By waiting for the trend line breakout, we
protect our capital and increase our chances for a true momentum shift. Look at this example, on the Procter&Gamble
stock. Here we have our first 2 conditions met, but
we didn’t have the trend line breakout, so this was a no go trade. Here, we have all conditions met and we have
a valid breakout. But as you can observe on the chart, the market
turned against our position and we lost this trade. But even if we lost the trade, this stock
still had potential for a good trade. Which came few weeks later, when we saw the
oversold level once again, the divergence and another trend line break. This time, the stock took off and we managed
to recoup our losses for the previous trade and recorded some extra profit. Like i said before, if you want to trade stocks
and increase your chances when you use this strategy, a stock screener is one of the most
important tools in your arsenal. It will help you sort through thousands of
stocks to find only those that match specific criteria. This way, you get to choose between stocks
and trade only the signals that have the greatest potential. This strategy is designed for timeframes higher
than 4 hours charts and for stock market, but I’ve also recorded good results on forex
market also, on lower timeframes. If you got any value from this, please consider
subscribing to our channel, share and like this video, as it would help us a lot in the
future. Until next time.

22 Replies to “Best Commodity Channel Index CCI Trading Strategy | Forex CFD Trading”

  1. If you learned something new, make sure you Subscribe & Like this video (it only takes 5 seconds but will help us a lot)
    ▶ Ready for some TRADING and INVESTING action?
    https://thesecretmindset.com/academy/

  2. sir, ive red the article on the link about another way to trade cci, is the day trading stat. 15mins/30 mins can also be applied in 5 mins? can i change the value of cci from 100 to 300 to filter false signal in 5 mins? same ema value? or should i change it also? thanks again sir.

  3. "Trade only long position on stocks with good fundamentals." I couldn't agree with you more, that's the only way to make money in the stock market based on my experience.

  4. CCI is meant to show when to trade and not what you describe as oversold and overbought, but this is the opposite of what you describe here. But there are many who prefer to trade when the cci line crosses the zero point in cci, but otherwise there are many ways to use most indigators.

  5. Contact Mr Reid Hoffman, bin-bot-pro is better ha i think because man you can leave the robot running and make some serious money!

  6. Nice vdo👌👌👌For Daytrading purposes, on what timeframe should we look at the CCI indicator and if I am creating a stock screener, what timeframe should I give so that CCI has met +200 and -200.

Leave a Reply

Your email address will not be published. Required fields are marked *