First and foremost, CCI forex floor trader system works best in a trending environment. The system is made up of two simple moving averages and the Commodity Channel Index indicator.
Let’s begin with preparing our forex charts.
Chart Preparation:
- Time Frame: 30 min and higher
- Currency Pairs: Any
Indicators:
- 4 period Simple Moving Average (4 SMA)
- 26 period Simple Moving Average (26 SMA)
- 49 period Commodity Channel Index CCI (49)
Entries:
- Enter long if 4SMA crosses 26 SMA from below and CCI crosses back above 0.
- Enter short if 4SMA crosses 26 SMA from above and CCI crosses back below 0.
Stop Loss:
- For long trades: Initial stop loss is placed 1 pip below the most recent swing low.
- For short trades: Initial stop loss is placed 1 pip above the most recent swing high.
Preferred Take Profit Methods:
1) Risk-to-reward ratio 1:2 or better
2a) For longs: exit the trade when a bearish candlestick pattern occurs in the market.
2b) For shorts: exit the trade when a bullish candlestick pattern occurs in the market.
Example: Short trade entry, EUR/USD hourly chart
4 SMA crosses 26 SMA from above. Six bars later, the CCI indicator goes back below 0. We enter short at market on the close of the candlestick. Initial stop loss is placed 1 pip above the most recent swing high.
Trading Example: CCI Forex Floor Trader System, EUR/USD 1 Hour Chart
4 SMA crosses 26 SMA from below. Nine bars later, CCI goes back above 0 and we enter long at market on the close of the candlestick. We enter long at 1.3551. Our stop loss is placed 1 pip below the most recent swing low at 1.3509.
In this situation our stop loss is 42 pips away from our entry at 1.3551. The EUR/USD moved over 100 pips in our favor.
