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Use CCI on the bottom of your trading charts to measure the variation of a stocks,forex,futures price from its statistical mean. High CCI above the 0 line show that prices are unusually high compared to average prices. Low CCI values show that prices are unusually low compared to average prices. The CCI is an oscillator that typically fluctuates between –100 and +100.Forex pair prices are thought to be overbought when CCI moves up to the + 100 territory. Prices are considered oversold when CCI moves down into the – 100 territory. The CCI shows overbought and oversold levels of –100 and +100. CCI extremes correspond to turns in price as seen on the candlestick chart. The change in price in any of the markets that you are trading is where traders decide if they want to buy and sell. If trading were as easy as taking these automated buy and buy and sell signals, everyone would be making easy money but that’s not always how it works. When using an oscillator like CCI or RSI, MACD, Stochastic. Traders need to take into account two things Trends and Support and Resistance. In an uptrend, the CCI can produce readings of +100 or more, but is of little use in identifying tops or potential turning points for a short entry. In a downtrend, traders should look for CCI to help identify low risk shorting trades when CCI shows readings of +100 or higher. The slope of 20 ma helps show us the prevailing trend is down. The logic here is the opposite. When CCI is overbought during a downtrend in price action, this could show that some traders are buying after a rally in price and in the downtrend. That buyer is making a mistake and the combination of trend and CCI is telling us this. So, we want to sell to this buyer and the risk should be lower, the reward is high, and the trade should end up in the money. The CCI was also failing to show strength and the MACD was confirming a downtrend. The new traders ignored the warning signs of a failed pattern and listened to the pundits on web sites or trading chat rooms telling them the market was going to correct. At the break of the neckline, the novas traders shorted as experienced traders exited shorts and opened longs. There are several clues to the failing of the pattern before you would have lost on a short: Price stalled before the break of the neckline and even had a green candle before breaking. This shows buying pressure. Positive divergence on the MACD and CCI. Lack of follow-through after the break, small candles have no momentum, bottom tails are buying pressure. Time and time again, As stated before consistently profitable trading is not simply about winning frequently and making big bucks on each and every trade. Sure if traders do have a good run of profitable trades this will undoubtedly help with preserving capitol of the account and helps to cover you if you have a string of losing trades, but in the end, the successful trader strives for consistent trades at all times. Specifically, traders should believe that eighty percent of a trader's time should be spent observing, learning how the market works, practicing, and planning. And twenty percent of the time, actually executing and managing trades. People outside of the trading business often wonder how it is that people make money by staring at wiggly lines on a computer monitor all day. It doesn't seem like "work" to them. What they don't realize is that trading is a mental game, which can be more taxing than most any job out there. Stock and Forex CCI Trading
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