CCI MT5 EA

The CCI EA uses the Commodity Channel Index (CCI indicator) value on the last four bars in relationship with the Open/Close prices on the last three bars. A position opening signal is checked if less than 20 seconds remain before closing the current bar and if there are no other positions opened by this EA. The CCI indicator itself does not have to be attached on the trading chart, as shown below – this is a testing chart where the indicator window is inserted automatically.

The CCI expert advisor for Metatrader 5 has very simple and easy to understand settings. The stoploss, take profit, trailing stop / step values are in pips. There are three ways to set the trade lotsize:

1. the Lots value
2. the Martingale option – to lower the risk, this can be limited by the martingale multiplier and the number of times a consecutive losing trade can have its lotsize increased.
3. the Increase lotsize option, which simply increases the lotsize in steps, as defined by the trader, when either losing or winning a trade

As a rule of thumb, traders should probably not use both methods (Martingale and Increase lotsize) at the same time, as this might also increase the risks. But this depends on the traders’ risk appetite. The test below is meant to demonstrate that the CCI EA can be profitable, if setup properly. It is not meant to guarantee profitability, as this is determine not only by the trader’s skills and the quality of their trading strategy or automated solution used, but many other external factors such as unexpected price movements or just a broken internet connection.

More about trading using the CCI indicator below not necessarily related to the RobotFX CCI EA).

How to Trade Forex Using the CCI Indicator

The CCI indicator, or Commodity Channel Index, is a popular technical analysis tool that traders use to identify trends, overbought and oversold conditions, and divergences in the forex market. The CCI indicator was developed by Donald Lambert in 1980 and is based on the assumption that prices tend to move in cycles, with highs and lows occurring at regular intervals.

The CCI indicator is calculated by subtracting the average price of a currency pair from its current price, and then dividing the result by a constant factor that adjusts for volatility. The CCI indicator oscillates between +100 and -100, with zero as the centerline. The CCI indicator can be applied to any timeframe and any currency pair, but it is most commonly used on the daily and weekly charts.

How to Use the CCI Indicator for Trend Trading

One of the main uses of the CCI indicator is to identify the direction and strength of the trend. A positive CCI value indicates that the price is above its average and that the trend is up, while a negative CCI value indicates that the price is below its average and that the trend is down. The higher or lower the CCI value, the stronger the trend.

Traders can use the CCI indicator to confirm the trend by looking for readings above +100 for uptrends and below -100 for downtrends. Alternatively, traders can use the zero line crossover as a trend signal, where a cross above zero indicates a bullish trend and a cross below zero indicates a bearish trend.

Traders can also use the CCI indicator to identify trend reversals by looking for divergences between the price and the CCI. A divergence occurs when the price makes a new high or low, but the CCI fails to do so. A bearish divergence occurs when the price makes a higher high, but the CCI makes a lower high, indicating a potential reversal to the downside. A bullish divergence occurs when the price makes a lower low, but the CCI makes a higher low, indicating a potential reversal to the upside.

How to Use the CCI Indicator for Overbought and Oversold Trading

Another use of the CCI indicator is to identify overbought and oversold conditions in the forex market. Overbought and oversold conditions occur when the price deviates too far from its average, indicating a possible correction or reversal. The CCI indicator can help traders spot these conditions by looking for extreme readings above +100 or below -100.

Traders can use the CCI indicator to trade overbought and oversold conditions in two ways: as a counter-trend strategy or as a trend-following strategy. A counter-trend strategy involves selling when the CCI is above +100 and buying when the CCI is below -100, expecting a reversal or a pullback to the average. A trend-following strategy involves buying when the CCI is above +100 and selling when the CCI is below -100, expecting a continuation or a breakout of the trend.

However, traders should be careful when using the CCI indicator for overbought and oversold trading, as extreme readings can persist for a long time, especially in strong trends. Therefore, traders should always use other technical analysis tools, such as support and resistance levels, trendlines, and candlestick patterns, to confirm the signals and to manage the risk.

Conclusion

The CCI indicator is a versatile and useful tool that can help traders identify trends, overbought and oversold conditions, and divergences in the forex market. The CCI indicator can be used on any timeframe and any currency pair, but it is most effective on the daily and weekly charts. Traders can use the CCI indicator to trade with the trend, against the trend, or to anticipate trend reversals, depending on their trading style and objectives. However, traders should always combine the CCI indicator with other technical analysis tools and indicators, and use proper risk management techniques, to improve their trading performance and accuracy.