Financial circles around the globe have stopped all their investments, waiting anxiously for the results of the US presidential election to take place on November 3. This is to avoid short-term risks and prepare for the long-term plan. Personally, I am still making money in Olymp Trade with short and medium term Fixed Time Trade transactions using the CCI indicator. It is a simple indicator that helps you not to get distracted in concentrating on finding trading signals. Let’s cut the crap and go straight to the review!
A simple chart helps you see the opportunities more clearly
It is difficult to trade with a chart with dozens of overlapping technical indicators. However, it makes new traders really comfortable with such things. How about you? Do you like the security of indicators obscuring your earning opportunities?
For me, simplicity comes first in trading style. So the CCI (Commodity Channel Index) indicator is what I choose to put on my price chart.
The upper half is a Japanese candlestick chart that helps you to clearly follow the price movement. The lower half is the section for the CCI indicator. It ranges from about +300 to -300 depending on the currency pair. It is used by traders in the following cases:
Find reversals when the market is overbought or oversold.
The price is oversold when the CCI indicator is below -200. Conversely, the price reaches the overbought zone when the CCI is above +200. Those are places with a high probability of reversal that offer an easy opportunity for reversal trades.
Predict trend continuation
The price is in an uptrend when the CCI is between 0 and +200.
The trend is down when the CCI indicator ranges from 0 to -200.
Divergence of CCI indicator
Divergence is a signal appearing quite popular in the market and very meaningful for investors with the technical analysis style. Divergence can be divided into 2 types: bullish divergence and bearish divergence.
CCI bullish divergence: The price continues to decline but the CCI increases. This is a sign of a positive (or bullish) divergence, which signals that prices will soon reverse from bearish to bullish.
CCI bearish divergence: The price continues to increase but the CCI decreases. This is a sign of a negative (or bearish) divergence, signaling a price reversal from bullish to bearish.
How to trade with CCI indicator in Olymp Trade
There are many trading strategies for the CCI indicator. In which, there are 3 trading strategies which are used the most by traders as follows:
With this way of trading, traders will find reliable reversal points based on the CCI indicator in the overbought or oversold zone.
– Open an UP order when: CCI from above +200 (overbought) heads down.
– Open a DOWN order when: CCI from below -200 (overbought) points up.
For trading orders that safely follow the trend, when the price is back to 0 is the best time.
– Open an UP order when: the price tests the previous support and the CCI rebounds when touching 0.
– Open a DOWN order when: the price tests the previous resistance, at the same time, the CCI hits 0 and falls.
When the divergence occurs, that’s when you should focus most. Because after that, the price will reverse from bullish to bearish or bearish to bullish.
– Place an UP order when: when the CCI bullish divergence appears
– Place a DOWN order when: when the CCI bearish divergence appears.
Review trading orders opened in Olymp Trade using the CCI indicator
Conditions: A 5-minute candlestick chart. Default settings of the CCI indicator and the expiration time from 5 to 30 minutes.
Currency pairs: EUR/USD.
Capital management: Classic (balanced investment of $200 for each order).
1st order: On October 26, the EUR/USD price was in the overbought zone. Opened a DOWN order with an expiration time of 5 minutes for $200 when the CCI headed down from above +200 => I won.
2nd order: On October 26, the EUR/USD price was in the oversold zone. Opened an UP order with an expiration time of 5 minutes for $200 when the CCI pointed up from below -200 => I won.
*Notes: With reversal orders, you need to act quickly. Because in overbought or oversold zones, prices are highly likely to reverse within the next candle. If you are observing the 5-minute candlestick, then open a 5-minute short-term order.
3rd order: The EUR/USD price was in a downtrend. Opened a DOWN order with an expiration time of 30 minutes when the price touched the resistance zone and the CCI indicator hit 0 before dropping => I won.
4th order: Similar to the 3rd order, the trend continued to decrease. The price hit the previous resistance zone. The CCI indicator also hit 0 and then fell further. Opened a DOWN order with an expiration time of 30 minutes => I won.
Everything about the CCI indicator and my trading history is detailed above. To make money with it, you need to have more time to learn. Try trading with a Demo account. Do not madly rush into the transaction right after finishing reading the article. It will lead to a loss of money. Do not do that and then judge it as an ineffective strategy. Ask yourself why I make money and you don’t. I wish you success in trading.