As a trader, you will come across many different strategies. Some of them are based on indicators. Today’s article is about a strategy for trading Fixed Time Trades. It is a trend following strategy which means you will enter a trade along with a current trend. You will use two indicators here, the Commodity Channel Index (CCI) and the Exponential Moving Average (EMA).
Setting the Olymp Trade chart
Begin with logging in to the Olymp Trade account. Choose the instrument you wish to trade on this occasion. Decide on a chart type and its timeframe. Now, you can attach the indicators you will need in order to use a strategy.
There is an indicators icon on the left side of the platform. Click on it and find the Commodity Channel Index. Leave the settings as default (period 20). Next, repeat the procedure and click on the Exponential Moving Average. Change its period to 50.
You can also adjust the colour and thickness of the indicators’ lines if this will make the chart more transparent to you.
CCI and EMA combined into a trading strategy
In this strategy for trading Fixed Time Trades, each indicator plays an important role. The EMA helps to determine the trend. And you need to know what kind of trend is currently in the market as you are going to trade along with it. The CCI will provide a signal to open a transaction. Let’s see into details.
Going short with the CCI + EMA strategy
You trade along with the trend so in order to enter a short trade there has to be a downtrend in the market. To verify whether this is a case, check the relation between the candles and the EMA. You will get a confirmation of a downtrend when a candle intersects the line of indicator and closes beneath.
The second step is to wait for a signal produced by the CCI. The CCI is an oscillator that runs around 0 value. You should go short when the CCI falls below the -100 line.
With this strategy, you can keep the position open for the length of 3 to 4 subsequent candles.
Going long with the CCI + EMA strategy
To enter a long position you would like to make sure the market is in the uptrend. And you can be sure it is when the candle intersects the line of the EMA indicator and closes over it.
A signal to go long is produced when the CCI oscillator crosses 100 line on its way up.
Again, you can keep the position open for the duration of the next 3 to 4 candles.
Pros and Cons of Using the CCI + EMA Strategy
- ✅ Trend-following strategy that aligns with the current market direction.
- ✅ Uses widely available indicators (CCI and EMA).
- ✅ Suitable for various timeframes and trading instruments.
- ❌ Relies on accurate interpretation of the EMA and CCI indicators.
- ❌ Requires patience and discipline to wait for confirmation signals.
- ❌ Not suitable for all market conditions; works best in trending markets.
|Downtrend confirmed by candle closing below EMA||Open a short position|
|CCI falls below -100 line||Open a short position|
|Uptrend confirmed by candle closing above EMA||Open a long position|
|CCI crosses 100 line on the way up||Open a long position|
The strategy I have described today joins the CCI and the EMA indicators. One is used to confirm the trend direction and the other to obtain a signal to enter a trading position.
Once you close your transaction, do not open another one straight away even if the CCI remains below -100 (for short positions) or above 100 (for long trades). You should wait until the candle crosses the EMA line over again.
With time, you can try other indicators’ settings. If you are using a short timeframe you can increase the period of the EMA. It is advisable not to go beyond the value of 24 for the CCI period.
Remember about the practice account which Olymp Trade has in its offer completely for free. Go back there whenever you wish to check new settings or a new strategy. Once you are ready, move to the real account to earn profits.
Q&A – CCI + EMA Trading Strategy
- Q: What indicators are used in the CCI + EMA strategy?
- A: The strategy combines the Commodity Channel Index (CCI) and the Exponential Moving Average (EMA) indicators.
- Q: How can I confirm a downtrend using this strategy?
- A: Look for a candle closing below the EMA line as confirmation of a downtrend.
- Q: What signal indicates a short position entry?
- A: Open a short position when the CCI falls below the -100 line.
- Q: How do I confirm an uptrend for a long position?
- A: Look for a candle closing above the EMA line as confirmation of an uptrend.
- Q: What signal indicates a long position entry?
- A: Open a long position when the CCI crosses the 100 line on its way up.
We are sorry that this post was not useful for you!
Let us improve this post!
Tell us how we can improve this post?