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Timing Trades With The Commodity Channel Index

Short Term Strategies, Scalping, Price Action Analysis, and Risk Management. One of the hardest steps a trader must take before scalping their favorite Forex pair is creating a strategy. While strategies can range from the complex to the mundane, creating a plan for trading the market does not have to be needlessly complicated. Today, we are going to review a simple three step CCI Commodity Channel Index strategy that can be used for scalping trending Forex currency pairs. The first step to trading any successful trend based strategy is to find the direction of the market!

The period EMA Exponential Moving Average is an easy to read indicator for this purpose. Traders can add this indicator to any graph with the intent of finding if price is above or below the average. If price is above the EMA, traders can assume that the trend is up while looking to initiate new buy orders. Below, we can see a 5minute NZDUSD chart accompanied with the period EMA.

Commodity Channel Index (CCI) [ChartSchool]

Given the information above, traders should look to buy the NZD USD , as long as it remains trending higher above the EMA. It should be noted in the event of a dow ntrend price under the EMA , traders will look to sell as price decreases. Time Frame Analysis for Market Scalpers.

Once a trader has identified the trend and created a trading bias using the period EMA, traders will begin looking for ways to time their market entries.

Using a technical indicator is a favored choice for this task, and the CCI Commodity Channel Index oscillator can be added to your graph for this exact purpose. Below, we can again see the NZDUSD 5minute graph, this time with the CCI indicator added.

With the NZDUSD trading in an uptrend, traders will look to buy a retracement when CCI signals momentum returning back in the direction of the trend. This occurs when the indicator crosses back above an oversold value of It should be noted again that only buy positions are being taken during this uptrend.

This is just one of many ways you can use CCI in an active trading plan. As with any active market strategy, scalping Forex carries risk of loss. Because of this, traders should always consider their exits as well as their entries. Scalpers can use a swing low or even the period MVA as places to set stop orders.

In the event that the NZDUSD begins creating lower lows, traders will wish to exit any existing long positions and look for other opportunities. Risk Management for Scalpers. To contact Walker, email WEngland DailyFX.

The CCI Indicator

Interested in learning more about Forex trading and strategy development? Register here to continue your Forex learning now! DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. Market News Headlines getFormatDate 'Wed Jun 21 GBP Reacts to CB Talk as the Queen Speaks getFormatDate 'Wed Jun 21 Technical Analysis Headlines getFormatDate 'Wed Jun 21 Gold, USD Strong Inverse Correlation and in Confluence getFormatDate 'Wed Jun 21 Education Beginner Intermediate Advanced Expert Free Trading Guides.

News getFormatDate 'Wed Jun 21 News getFormatDate 'Tue Jun 20 Short Term Strategies, Scalping, Price Action Analysis, and Risk Management Connect via: Talking Points Traders should find the trend to form a trading bias CCI can be used to identify market entries Traders should manage risk in the event of a trend shift One of the hardest steps a trader must take before scalping their favorite Forex pair is creating a strategy.

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