The CCI strategy is centered around the utilization of specific CCI indicators. Digital options traders have been using the CCI (Commodity Channel Index) for quite some time, with much success. The CCI has been around for decades and has gone through several changes. The CCI indicator used today is quite different from the original. This popular indicator helps traders to distinguish between actual trends and market noise when trading with commodities.

Decoding CCI Readings

Predicting price movement direction can be tough, no matter which asset class you choose to trade with. Even so, an accurate CCI reading can render the task much simpler. The CCI is distinct from some other indicators in that it uses just one line that oscillates between values of -/+ 200. A solid trend is indicated at the halfway point. An uptrend is identified when the indicator shifts above +100. A down trend is identified when the price drops under the -100 mark. This range is wide enough to protect against market noise misreads, allowing you to see clear direction.

A comprehensive understanding of the CCI will enable you to make investment decisions without second-guessing each and every move. The only concern is that trends do not always push past the +/- 100. When they do, be on the lookout for reversal. Fast action may be necessary. To avoid problems, consider using this indicator along with others. This should allow you to identify the trend even before the CCI confirms it.

Trade Timing

Timing is very important. Don’t allow yourself to become so drawn into analysis that you miss out on excellent entry points. When entering late, you boost your risk of losing out to a reversal. As pointed out above, think about utilizing at least one additional indicator that can point out the trend quicker than the CCI does. Even if the extra indicator isn’t highly accurate, you just need a tip, after which you can use the CCI for confirmation.

The CCI strategy offers you a set time for optimal entry and conveys how long prime entry may last. Once the asset begins to be overbought or oversold, re-evaluation will be needed. Reading the CCI correctly does require some practice, but the value it provides makes it well worth the time invested to learn.