Proper timing when to enter and exit a trade is most
important. You need to use our foundation Supply and Demand strategy
to time the markets turning points in advance. Oscillators in the mix
as some traders really want a conformation tool and are not
comfortable with just price action analysis alone. CCI attempts to
measure the variation of a stocks futures price from its statistical
mean. High CCI values suggest that prices are unusually high compared
to average prices.
Low CCI values suggest that prices are unusually low compared to average
prices. The CCI is an oscillator that fluctuates between –100 and
+100. Price is considered overbought when CCI moves into +100
territory. Price is considered oversold when CCI moves into –100
territory. The CCI on the chart indicates overbought and oversold
levels of –100 and +100. CCI extremes show turns in price as shown on
the candlestick chart. This is where a trader obviously wants to buy
The turn in price action in any market if forex or stock trading were as
easy as taking these automated buy and sell signals, all traders would
be making easy money. When traders use an oscillator like CCI, RSI,
MACD, Stochastic, it is important to take into account two things
Trends and Support demand and Resistance areas.
In an uptrend, the ideal use for CCI is to help identify low
risk buying opportunities when CCI produces readings of –100 or more.
The slope of the 20 Mamboing average, helps show us the prevailing
trend is up. Traders should think about who you are buying from when
CCI is oversold in an uptrend. The seller is someone who is selling
after a decline in price in the context of an uptrend a market whose
average price is rising . This seller is making two key mistakes that
ensure the odds are stacked against them which means they are stacked
in your favor as the buyer when CCI produces that oversold reading.
Investors use CCI to identify new buying and selling in the
wrong areas and at the wrong times. Proper use of the CCI in
conjunction with Trend analysis and Support and Resistance areas can
help stack the odds in your favor when forming a trading decision and
trading plan. It also helps take emotion out of trading as it allows
us to view objective information at times when trading emotions are
tested to the fullest.
FX and stock traders will use swings as points for setting
stops. When you are in a long position, you want to trail price as it
moves higher so you can lock in your profits. To do this is to set
your stop just below the most recent swing low. Prices will move up in
the trend and naturally retrace before moving higher.
After such a retracement, you can move your stop to the newest swing low
when prices move up to a new high in the trend. You can do this
technique until you are either stopped out or reach your sell point.
If a swing low is broken, then the definition of an uptrend higher
highs with higher lows has been broken and you should not be in a
long position any more.
Most of the problems people have in trading come down to the
two main emotions that affect all of us when staring at the screen -
fear and greed. All even long term successful traders will be affected
by these emotions sometimes.