Commodity Channel Index

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Welcome to currency trading with Profiforex!
This video is devoted to the "Commodity Channel Index."To apply Commodity Channel Index to the chart, press the "Indicators" button on the toolbar and choose "Trend" - "Commodity Channel Index."

Subsequently, the window in which we change the indicators properties appears.Here we can choose the settings of the averaging period, method, fixed maximum and minimum, and visualization.

When we're choosing the method, we specify the prices to which the indicator will be applied.These are open prices, close prices, maximums, minimums and their different combinations.

The Commodity Channel Index, or CCI, shows the normed (meaning calculated as a percentage) oscillator of the moment. The CCI measures the deviation of the average current market price from the moving average price of period N, as defined in the settings.

The CCI is calculated in the following way: Where T is averaging, MA is moving average and D is deviation from the moving average.

The CCI formula gives an easy-to-use number that reflects how far the latest prices were diverted from the moving average (balance line). 

Generally, the crossing points of the indicator and lines +100 and -100 are used as CCI signals. We can fix these lines as part of the settings.

As we can see from the picture, the indicator works well when there are big price fluctuations, or when a trend emerges from the corridor after a flat phase.

Let's study one of the strategies when the CCI is applied along with Bollinger bands.When the CCI reaches 100 line we place an order for the breakout of the Bollinger band.

If the price reaches the Bollinger band but the CCI didn't reach one hundred or minus one hundred percent, we place an order for snapback from the Bollinger band.

As you can see, this combination of indicators works well on trend as well as on flat.