Time Scalping Entries With CCI
Talking Points:
- CCI is a momentum oscillator used for Overbought / Oversold values
- CCI can be used in conjunction with a MVA to determine trading signals
- Scalpers can time entries when momentum returns with the trend
Timing entries is one of the most difficult parts of trading retracements in the trend. This is especially true for scalpers looking to take advantage of quick changes in price and momentum in the market. Normally an oscillator can be used to simplify this process and give traders a clear execution signal. Today we will review using the CCI (Commodity Channel Index) oscillator for scalping trends. Let’s get started!
CCI and Overbought / Oversold Levels
If you are already familiar with RSI, Rate of Change, or other oscillators you are one step closer to trading with CCI. Like many oscillators, CCI uses a mathematical equation to depict overbought and oversold levels for traders. Pictured below is CCI, which uses a +100 reading to indicator overbought conditions, while a reading below -100 represents an oversold level.
Normally 70-80% of the values tend to fall between these points, which can be interpreted as buy or sell signals. As with other overbought/oversold indicators, this means that there is a large probability that the price will correct to more representative levels. Knowing this, trend traders will wait for the indicator to move outside of one of these points before reverting back in the direction of the primary trend. Let’s look at an example using the strong trend on the GBPCAD.
Learn Forex –CCI Overbought / Oversold
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Timing a CCI Entry
Below we can see an example using a 5minute GBPCAD chart. The currency pair is in an established uptrend with price remaining above a 200 period moving average. Knowing this, trend traders should look to initiate new buy positions. The primary way of timing entries with CCI in an uptrend is to wait for the indicator to move below -100 (oversold), and enter into the trade when CCI moves back above -100. This creates an opportunity to buy the currency as momentum is returning back in the direction of the trend. In the event you are trading a downtrend, the process can be reversed. Trades to sell can be timed as momentum pulls the indicator back beneath an overbought value.
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WEEKLY DIGEST for Scalping Trading 2014, October 19 - 26
Scalping: What You Need to Know about the Trading Strategy
What Awaits a Scalper?
Scalping revolves around the concept that the majority of forex patterns are rather predictable; they often stay in a similar zone during the initial stage. Regardless whether the streak will continue, a scalper plans to exit a trade after a brief time. The strategy, therefore, is best for short-term traders. You can say that it is also for realistic traders who are not interested in watching the unpredictable fate of trades.
On that note, scalping is a strategy that a number of newbie and experienced traders prefer to use. It follows the idea of taking the upper hand when it comes to using leverage, along with the ability to make multiple short-term trades. If a trader were to make thousands of trades daily, for instance, he would be earning thousands of points daily, too.
A Roster of Advantages
A primary advantage of scalping is that it is an effective trading strategy even for a newbie trader. The technique is simply to enter trades at the beginning, then, set exit points not long after. Granted the subject knows the first thing about making a trade, he can profit.
Other advantages of scalping:
- The risk of a loss is minimal, since a trader will not maintain a position and will instead exit a trade prior to letting his loss go beyond 1%
- The trading strategy does not need frequent monitoring; once you make a trade, minutes or even seconds is all it takes for you to pay attention to the market
- The winning probability is high since forex patterns are foreseeable early on, and the overall profit, therefore, is also high
The Drawback
Scalping, however, is not for all traders. For the most effective results, you must be willing to invest time, energy, and of course, funds. Familiarity with the structure of the forex market can also be useful since you will be monitoring trades simultaneously. Only if you have the resources to make at least hundreds of trades daily, the trading strategy seems ideal.
the source
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iCCI_NRCandle - indicator for MetaTrader 5
This is interesting indicator found for MT5 which can use used for the scalping: iCCI_NRCandle - indicator for MetaTrader 5.
How to install
- Download 3 files from the link above (smoothalgorithms.mqh, icci_nr.mq5 and icci_nrcandle.mq5).
- Place smoothalgorithms.mqh file in \MQL5\Include\ folder.
- Place icci_nr.mq5 and icci_nrcandle.mq5 to \MQL5\Indicators\ folder, compile those 2 indicators or re-start MT5.
- Open your chart, and attach icci_nrcandle indicator to the chart.
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This indicator can be used as a scalping indicator:
- if blue bar in separate window is crossing zero level to above - buy signal; exit is 100 level crossing;
- if red bar in separate window is crossing zero level to below - sell signal; exit is -100 level crossing.
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Ultra - ATR scalping tool
Ultra - ATR scalping tool - indicator for MetaTrader 4
Attachment 26140
Quote:
Experimental indicator I wrote for myself. It's made to show some reference (it's more like a rifle scope, than a rifle). Main components are pip scale, ATR/pivot, MA level, RSI, and spread alert. Can be used on any timeframe, but since it's made for scalping it is somewhat adjusted for M1-M15.