CCI Adaptive Smoother Indicator MT4
Overview
The Commodity Channel Index (CCI) is an oscillator that measures a security’s variation from its statistical mean. It has gained popularity among traders due to its versatility and ability to generate buy and sell signals. Let’s explore how to use it effectively:
Strategy
- CCI Movements Above +100 and Below -100:
- Buy Signal: When the CCI moves above +100, a security is considered to be entering a strong uptrend. Traders can initiate a buy position.
- Exit Signal: Close the position when the CCI moves back below +100.
- Sell Signal: When the CCI moves below -100, the security is in a strong downtrend. Traders can consider selling.
- Exit Signal: Close the position when the CCI moves back above -100.
- Counter-Trend Trading (Not Recommended):
- Oversold Levels: CCI below -100 indicates oversold conditions. Consider a buy signal when the CCI moves back above -100.
- Overbought Levels: CCI exceeding +100 indicates overbought conditions. Consider a sell signal when the CCI moves back below +100.
- Divergence: Apply divergence analysis to enhance signal robustness.
Trading Process:
- Calculation:
- The CCI measures a security’s variation from the statistical mean.
- It is calculated as the difference between the typical price of a commodity and its simple moving average, divided by the mean absolute deviation of the typical price.
- Lambert set a constant of 0.015 to ensure that approximately 70% to 80% of CCI values fall between -100 and +100.
- The CCI fluctuates above and below zero.
- Using the CCI:
- Lambert’s trading guidelines focus on movements above +100 and below -100 to generate buy and sell signals.
- When the CCI moves above +100, a security is considered to be entering a strong uptrend, and a buy signal is given. The position should be closed when the CCI moves back below +100.
- Conversely, when the CCI moves below -100, the security is considered to be in a strong downtrend, and a sell signal is given. The position should be closed when the CCI moves back above -100.
- Counter-Trend Trading:
- Traders also use the CCI for identifying reversals.
- Oversold conditions occur when the CCI dips below -100, while overbought conditions occur when it exceeds +100.
- Buy signals might be given when the CCI moves back above -100 from oversold levels.
- Sell signals might be given when the CCI moves back below +100 from overbought levels.
- Smoothed CCI Indicator:
- If you’re interested in a smoothed version of the CCI, you can explore the Smoothed CCI Commodity Channel Index Indicator. It reduces volatility and provides a smoother value for use in your trading strategies.
Minimum Deposit
The minimum deposit required to trade using the CCI Adaptive Smoother Indicator MT4 depends on your broker and risk tolerance. However, a conservative approach would be to start with at least $500.
Optimal Time Frame
The CCI can be adjusted to different timeframes. For intraday trading, consider timeframes like H1 or H4. For swing trading, D1 or W1 may be more suitable.
Recommended Currency Pairs
The CCI works well across various currency pairs. Here are some recommendations:
- EUR/USD: A popular pair with good liquidity.
- GBP/JPY: Known for its volatility.
- AUD/USD: Suitable for trend-following strategies.
Disclaimer: Trading involves risks, and past performance is not indicative of future results. Always conduct thorough research and seek professional advice before trading.📈🍀
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