How CCI Trading Strategy Can Work For Binary Options
Even though it is known as the Commodity Channel Index, CCI can be used as an indicator for all markets and not just for commodities. This indicator moves above and below the zero point, going back and forth to indicate the market trends. While this indicator can be used in a lot of ways, there is one commonly used strategy that makes the best use of this indicator. This basic CCI strategy was developed Donald Lambert, the developer of this index.
Here is how this strategy works:
If the CCI moves above +100, it is an indication that the price in the market is trending strongly at the moment. This triggers a buy or call signal, giving you the perfect opportunity to make your trade. Then, you should hold onto your trade until the index drops below the +100 level. On the other hand, if the CCI is currently below the -100 point, that indicates a market downtrend in prices, triggering a sell or put signal. You should ideally hold onto your short sell trade made during this time until the CCI moves above -100.
This basic strategy was designed by Lambert for trading different financial securities and assets in the market in a traditional way. However, the strategy can very well be used for trading binary options with some additional care. You will be required to test and monitor the volatility of these options closely in order to determine what could be regarded as the ideal expiry time for the different financial instruments you are planning to make a trade in.
In some cases, the CCI can be prone to triggering some false signals. However, the occurrences are extremely rare and can be easily avoided if the strategy is used together with other variations of CCI strategy. Also, once you gain experience in trading binary options, you can always add your own adjustments to this basic strategy as it is simple enough to allow you to do so. In both ways, this strategy gives you a simple enough price indicating tool that allows you to tell when to make and hold a trade in order to make profits.
The best way to ensure that your CCI trading strategy will work for you is to test it before implementation. There are several demo accounts that will allow you the chance of testing different variations of this strategy in the binary options market, allowing you to make up your mind on how you want to trade.