CCI Channel Trading Strategy For MT4
Table Of Contents:
- CCI Channel Trading Strategy For MT4
- The CCI channel trading strategy for MT4 – Long positions
- The CCI channel trading strategy for MT4 – Short positions
- Is the CCI channel trading strategy for MT4 effective for trading forex?
Please note: This strategy was publicly published in the trading community and is free to use. We do NOT make an attempt to decide if this strategy is profitable or not, because we know that the major factors regarding trading results are the skills/experience of the trader who executes the strategy. Therefore, we are mainly explaining the components and rules of the strategy. If applicable, we are highlighting advantages, disadvantages and possible improvements of the strategy.
The CCI Channel Trading Strategy For MT4 is yet another one of the many forex trading systems that makes use of the commodity channel index as the main indicator behind the trading system. Besides the commodity channel index, there are a few more indicators that are in use.
The CCI channel trading strategy for MT4 is a day trading system that makes use of some of the usual and also custom indicators in this trading system. Firstly, we have the CC cloud indicator. This indicator is responsible for plotting the green and red cloud type of figures on the price chart.
In some ways the cloud looks similar to that of an Ichimoku cloud, but there is a slight difference. The cloud is mostly flat tops and bottoms and this probably signals potential levels of support and resistance. One of the main points to note is that we should not be trading when price is inside the clouds.
The cloud also changes color and therefore represents support when the cloud color is green and represents resistance when it is red. There are also small white lines that are plotted near the cloud. These serve to act as bullish or bearish market conditions as well. It is part of the cloud indicator, but we do not see the need for this extra setting in the cloud indicator.
Therefore, traders can disable this if they wish.
Besides the cloud, the CCI channel trading strategy for MT4 also uses two moving averages. These two moving averages behave as they should mainly, they signal bullish or bearish market conditions depending on whether price is trading above or below the moving average lines. The two moving averages used in the CCI channel trading strategy for MT4 are 5 and 9 period exponential moving averages.
With this setting, the two moving averages are able to capture short term movements in price. This is also one of the reasons why it is not suitable to trade the CCI channel trading strategy for MT4 on higher chart time frames.
We then have the SDX pivots indicator. As you might have guessed by now, the pivot indicators basically serve as take profit levels on the price chart. Traders book profits once price reaches one of the pivot levels.
In the sub window, we also have the CCI channel indicator. This is a very modified version of the commodity channel index. Here, we see the signal line moving between two outer boundaries of the levels. It also represents when the trend is up or down. Not much is known on how the cci channel indicator is supposed to work. But going by the indicator's movements, we can get to see bullish and bearish cycles in the market.
A combination of these custom indicators makes the CCI channel trading strategy for MT4. Let's now take a look at how you can trade using this trading system.
The CCI channel trading strategy for MT4 – Long positions
To trade long positions by using the CCI channel trading strategy for MT4, we start by waiting for price to close above the cloud. By this time, the cloud indicator would also turn green, suggesting that it is now acting as support. Following this, we should then wait for the two moving averages as well.
The two moving averages should potentially be bullish. Ideally, the moving averages are bullish, just a few sessions before price moves above the cloud. However, the closer it is, the better the chances about you being able to capture larger profits.
Finally, we wait for the CCI indicator in the sub window to turn bullish. This means that the signal line should be moving upward from below. This suggests that momentum is also bullish.
After all the indicators signal that the market is moving up, you can then take a long position at market. Set your stop loss to the recent swing low, or near the low that formed prior to the bullish signal from the moving averages. Finally, use one of the upper pivot levels as your take profit for the trade.
The CCI channel trading strategy for MT4 – Short positions
To trade short positions by using the CCI channel trading strategy for MT4, we start by waiting for price to close below the cloud. By this time, the cloud indicator would also turn red, suggesting that it is now acting as resistance. Following this, we should then wait for the two moving averages as well.
The two moving averages should potentially be bearish. Ideally, the moving averages are bearish, just a few sessions before price moves below the cloud. However, the closer it is, the better the chances about you being able to capture larger profits.
Finally, we wait for the CCI indicator in the sub window to turn bearish as well. This means that the signal line should be moving downward from above. This suggests that momentum is also bearish and ready for shorts.
After all the indicators signal that the market is moving down, you can then take a short position at market. Set your stop loss to the recent swing high, or near the high that formed prior to the bearish signal from the moving averages. Finally, use one of the lower pivot levels as your take profit for the trade.
Is the CCI channel trading strategy for MT4 effective for trading forex?
In conclusion, the CCI channel trading strategy for MT4 looks to be a somewhat complex trading system of sorts. The indicators aren't really intuitive except for the fact that the cloud indicator really clutters the chart. The numerous arrows that are plotted on the price chart are also a cause for confusion.
While the CCI channel trading strategy for MT4 is perfectly suited for beginners, it can become a bit confusing, as a result, we recommend that traders apply caution when trading with this method. Another thing to note is that the trading template is also a bit heavy. Therefore, using the template that comes with the CCI channel trading strategy for MT4 on multiple charts can slow down the performance of your trading terminal.
Overall, the CCI channel trading strategy for MT4 is a fairly ok trading system if you want to try it out. However, given the fact that the indicators are highly customized does not allow for much details in terms of customization in using this trading system.
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