Through Forex Market, traders can buy and sell Forex, as well as make potential profits from small fluctuations happening in the rates of exchange.
That being said, a lot of economists believe that the foreign exchange is an extremely volatile market that allows the traders to see the results– whether positive or negative, in just a short period of time.
Likewise, a lot of traders heavily rely on free Forex indicators that can analyze price charts and provide mechanical interpretation of price changes.
This method allows them to come up with fully informed decisions that could positively affect their investment.
The Commodity Channel Index or CCI Strategy is one of the technical indicators that most traders use.
Truth be told, when it comes to trading, there’s no perfect indicator that can guarantee success.
Though, it’s possible to boost your experience in Forex trading by learning and understanding the fundamentals of the CCI indicator.
To perform that, using your foreign exchange charting software program, create a price chart and apply the CCI indicator on that chart.
After that, you’ll see a fresh sub-chart under your current price chart.
This chart contains a solitary line that degenerates below and over its zero line located at the center, while the currency prices degenerate as well.
As you examine the charts, try to look for the -100 and 100 levels, because most traders consider these levels quite important.
Also, in case that your charting program has a drawing tool, it’s advisable to mark these levels while you try to analyze the chart, to make them more apparent.
It’s also wise to buy into the position once your CCI gets over the 100 level, because this could assist you in getting the picture on how to respond whenever price alterations take place.
Basically, the CCI monitors the positive trend whenever it shows a response.
This kind of trade could be favorable as long as the CCI maintains the 100 or more level, but it should be shut down if it falls below 100.
Wherein, if the CCI indicator falls below -100 level, the traders can sell short in the currency market.
This plan of action asks the traders to sell securities, currencies, and even commodities that they don’t own.
Thus, it allows them to make profit from a fall in forex prices.
This is a negative trend in the CCI and once it rises to the -100 again, then it’s advisable to exit the position.
Furthermore, when the CCI goes up through the -100 level, one should buy into the Forex market, because it implies that a negative trend might be happening.
This functions as a notification for short sellers and serve as a buying alert, especially if traders don’t have any open position available.
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