There is a wide range of tools that can help you to improve business decisions. Some of these tools can give you direct references to the signing of the deal, while others simply just tell you the firmness and direction of the trend or the level of volatility. However, when trading options you have to know the sharp administrative changes in the price. So first you need to have to an indicator warns you before the happening of these transformations.
CCI indicator does that role. It alerts abrupt changes also
tell you of the emergence of new trends, although the indicator has been
developed primarily for work in the commodities market, but it can be used with
currencies and indices. Commodity Channel Index helps you determine the
Periodic direction for the price of an asset which measures the ratio between
the price of the underlying and the moving average price for natural drift. Despite
the lapse of more than two decades for the development of the ICC, but it is
still very popular with experienced operators.
CCI estimation equation is as follows:
ICC = (price - average price) / (0.015 * standard deviation
of prices).
When the price here is “typical price" is calculated
using the following equation:
TP = (day + today's summit during today's closing price) / 3
The standard deviation is available at a price in 3 steps. SMA
provides average values, and so the first step will put each on average
compared to the model after taking only the absolute values. If you calculate
the ICC for a period of 20 days, you have to do this subtraction of the twenty
days prior to the current date. In the second period and eventually collect
these values divided by the number of days of observation, transfer 20, for example.
Due to the presence of disk laboratories 0015, the most common values of the
ICC index ranging between -100 and 100.
You will also notice that the Commodity Channel Index
measures the difference between the initial price and the average exchange
rate. More positive value of the ICC, it is the rise in original power while
increasing the negative value of the CCI refers to the opposite scenario.
You can apply in your deals as indicator simultaneously or
as a key indicator, Depending on the previous application when the high CCI 100
pushes this refers to the prices and the strength to go to the formation of an
upward trend. When reading the CPI has fallen below the level of -100, which
indicates the degree of impairment and the price change indicates the beginning
of the downward trend. From the point of view of the main index, the CCI can
help you discover the event of overbooking or purchase orders with the change
of momentum.
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