morbius glass

Reviews – Comics, DVD’s, Books. Finance – FX markets, Stocks, Economics. Culture

CCI Indicators for Stocks, FX trading, Commodity Trading

Posted by Adrian on March 5, 2007

Just recently I have been using the CCI (Commodity Channel Index) indicator for FX and Stocks. I like it. Like most indicators for the financial markets (and there are so many), it’s really up to the individual to find the one they like and learn to use it. I can’t handle a over cluttered platform. So I prefer to keep mine relevantly simple just using the Bollinger Bands, EMA and CCI. Basically indicator/Oscillator tell you when a good time is to buy, and to sell. But they will struggle with sharp adjustments or corrections in the market. A good example was the stock market ‘correction’ that occurred on the 28th Feb.  But never the less the CCI does show trend reversals and good ‘buy’ and ‘sell’ information.

My calculation for a CCI is taking the two lows from a years chart, or two highs – calculate the time length between these to points , the divide by  (1/3 of the cycle). Most trading charts already have the calculation inserted into the platform.  You just need to choose the time (days) you would like to use.  So it can be a personal choice how one would forecast trends and the movement of stock.

example of CCI  – from stockcharts.com

cci-dell.png

Info regarding the 100 + and 100  – in developing sell and buy signals, from stockcharts.com:

  • CCI can be used to identify overbought and oversold levels. A security would be deemed oversold when the CCI dips below -100 and overbought when it exceeds +100. From oversold levels, a buy signal might be given when the CCI moves back above -100. From overbought levels, a sell signal might be given when the CCI moved back below +100.

  • As with most oscillators, divergences can also be applied to increase the robustness of signals. A positive divergence below -100 would increase the robustness of a signal based on a move back above -100. A negative divergence above +100 would increase the robustness of a signal based on a move back below +100.

  • Trend line breaks can be used to generate signals. Trend lines can be drawn connecting the peaks and troughs. From oversold levels, an advance above -100 and trend line breakout could be considered bullish. From overbought levels, a decline below +100 and a trend line break could be considered bearish.

Advertisements

One Response to “CCI Indicators for Stocks, FX trading, Commodity Trading”

  1. allocator said

    Hey Zek,

    Nice-looking blog. I commented back to your comment on mine.

    So which way are we going do you think? Up or down?

    Cheers,
    Allocator

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

 
%d bloggers like this: