Integrated Commodity Channel Index Forex Trading Strategy

The Integrated Commodity Channel Index fx trading strategy would be deployed as a short term trading strategy. Although the core of the BBands Stop custom indicator can be used for designing scalping and long term trading strategies. Our focus is to keep the system profitable, as a short term trading system.

Chart Setup

MetaTrader4 Indicators: BBands_Stop_v1 (default setting), Buzzer ((default setting), Commodity Channel Index (14).

Preferred Time Frame(s): 1 minute, 5 minute, 15 minute, 30 minute, 1-Hour

Recommended Trading Sessions: Any (except during news release)

Currency Pairs: Any

Download

Download The Integrated Commodity Channel Index Forex Trading Strategy.

Buy Example:

commodity-channel-index-forex-trading-strategy

Fig. 1.0

Trading Strategy

Long Entry:

Initiate a “Buy” order when the following conditions are met as depicted in our chart below:

  • The CCI (14) signals an eminent “Buy” when the curve dips below the “-100” level (a condition that indicates price to be in oversold regions).
  • The Buzzer (20) line turns into green, signaling a bullish trend.
  • Finally, we’ll need to confirm with the BBands_Stop_v1 indicator to see if its dotted line has turned Chartreuse below price action. It is also important to take note of the BBands_Stop_v1 line distance from the candles. If the distance between the BBands_Stop_v1 widens as price drives further, then it is an indication that we’ll be riding a trending market.

Stop Loss: Based on individual money management strategy, stop loss should be placed below the first dot of the BBands_Stop_v1 dotted line.

Exit Strategy/Take Profit:  Trailing stops should be adopted when trading the “BBands Stop Integrated FX Trading Strategy.” Asides this, traders should exit trade when the following conditions set in:

  • The CCI (14) indicator spikes above the “100” level, thereby signaling an overbought condition.
  • The Buzzer (20) turns red, possibly indicating that buyers are losing it and more sellers are beginning to enter the market to drive price lower.
  • The BBands_Stop_v1 indicator dotted line changes to orange and is aligned above price on the activity chart.

Any or a combination of the above conditions should trigger an exit.

Sell Entry:

Enter a “Sell” order when all three gauges below are met:

  • The CCI (14) indicator climbs above the “100” level, and as such hints to a possible overbought condition.
  • The Buzzer (20) turns red indicating price is going to head down.
  • The BBands_Stop_v1 indicator dotted line changes to orange, aligned above price bars on the activity chart.

Stop Loss: Stop loss should be placed above the first dot on the BBands_Stop_v1.

Exit Strategy/Take Profit:  Asides using a stop loss to manage risk exposure, the following conditions are pointers towards exiting positions entered.

  • The CCI (14) indictor slides below the “-100” level.
  • The Buzzer (20) line turns green.
  • The BBands_Stop_v1 dotted line indicator turns orange from above.

Sell Example:

commodity-channel-index-forex-trading-strategy1

Fig. 1.1

Download

Download The Integrated Commodity Channel Index Forex Trading Strategy.

About the indicators

The BBands_Stop_v1 is based on moving averages and Bollinger Bands, which is quite an advantage for this indicator. It is interesting to watch out for the bands, when the BBands_Stop_v1 moves along with price ((i.e. it comes closer to price bars), then market is said to be choppy. On the other hand, the further away it is from price, the more trending the market becomes.

The Buzzer on the other hand is derived from modified moving averages. The indicator is designed trigger buy signals when the red line turns green. On the contrary, a sell signal is prompted when the green line turns red. The indicator favors trading in direction of the higher timeframe trend (if you’re trading the 15-minutes chart, then you should follow the 1-hour trend on the Buzzer.

Lastly, the “Commodity Channel Index”, or “CCI”, is an oscillator with its values wavering between values of “100” and “-100.” The indicator’s signal lines are plotted at both the “100” and “-100” level. A CCI value of 100 and above signals a strong overbought condition or bearish alert, while a CCI value of -100. A buy signal is generated when the CCI indicator dips below the -100 mark, thereby signaling a bulls market.

Put everything together and we have a strategy that can generate signals with some high degree of correctness for short term moves.

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