CCI Trading Strategy: Statistics, Facts And Historical Backtests!

Technical indicators help traders in timing the market, and the CCI (Commodity Channel Index is one of the indicators you can effectively use to time the momentum in the market. But what exactly is the CCI trading strategy, and what does it tell you about the market?

The CCI (Commodity Channel Index) is a technical indicator that measures the current price level of a security relative to an average price level over a given period. It is a momentum oscillator that is used to identify extreme conditions, such as oversold and overbought conditions, in the market. Its readings are relatively high when prices are far above their average and relatively low when prices are far below their average.

We start the article by explaining the theory behind the indicator, and we end the article by doing some backtesting CCI indicator.

What is CCI?

The commodity channel index (CCI) is a technical trading indicator that measures the current price level of a security relative to an average price level over a given period. It is a momentum oscillator that is used to identify extreme conditions in the market. Its readings are relatively high when prices are far above their average and relatively low when prices are far below their average. Extreme values may indicate overbought/oversold conditions in the market.

Originally, the CCI was used to trade commodities, but over the years it has been adopted to trade every kind of financial security including stocks