CCI and Momentum trading is an intraday
system will shortly explain all the indicators we will be using.
Time Frame 15 min or 30 min. Currency pairs: majors.
Momentum
The Momentum indicator is a speed of
movement (or rate of change) indicator, that is designed to
identify the speed (or strength) of a
price movement. In other words you should be buying
when the price is picking up momentum and selling when that momentum has been lost.
We use Momentum with period 60,
computed from typical price. The rule is that we go long only if the
Momentum is higher than 100, and go short if Momentum is lower than
100.
Commodity Chanel Index – CCI
The Commodity Channel Index indicator
is based on an observation that the market moves in cyclical
movements which means high and low of the price are coming in
periodic intervals and in
consecutive fashion. So, if we can
detect those cycles we can detect the beginning and the ending
of the trend. CCI is used to help identify price reversals, price extremes and trend strength.
of the trend. CCI is used to help identify price reversals, price extremes and trend strength.
We use CCI with period 60, computed
from typical price.
Entering the trade
As I said earlier, our trading time is
5:30am GMT time. You should get to the computer about 5
minutes before 5:30 and wait until the
candle finishes.
For indicator values, you should check
the chart at a close of 5:15am candle at 5:30am.
I use Alpari UK broker, so 5:30am GMT
is 7:30am in broker time that you see on the charts.
LONG signal
We will go LONG (buy) if and only if
ALL the following conditions are met:
1. Momentum(60) of the 5:15am candle is
higher than 100 AND lower than 100,8 (in other
words between 100 and 100,8)
2. CCI(60) of the 5:15am candle is
higher than 0
Then we will buy at Market price.
CCI and Momentum Intraday Trading

We can see that Momentum is above 100 (but below 100,8) and CCI is also above 0, so we enter
Long by Market price.
SHORT signal
We will go SHORT (sell) if and only if
ALL the following conditions are met:
1. Momentum(60) of the 5:15am candle is
lower than 100 AND higher than 99,2 (in other
words between 99,2 and 100)
2. CCI (60) of the 5:15am candle is
lower than 0
Then we will sell at Market price.
by Market
price.
NO TRADE
We will NOT TRADE for the day if some
of the conditions are not met.
For example Momentum >100, but CCI <
0; or if Momentum > 100,8
Example
At 22 July 2010, you can see that the
conditions to enter either long or short were not filled.
Momentum is below 100, but CCI is above
0.
We will always use fixed Profit Target
40 pips and fixed Stop Loss 40 pips. After we enter the trade,
we don’t manage it; we simply wait
until it hits profit or loss. You can leave the computer and check
the result in the evening or next
morning.
ALWAYS DOUBLECHECK that you have set
your Stop Loss and Profit Target properly before leaving the
computer!
Money Management
Rule1
Always use Stop Loss.
Stop Loss (SL) is an order that will
tell the system to cancel the trade at the given loss, if the market
is going against us. This way it protects us by keeping our loses
defined and small. Trading without SL or moving SL will eventually
lead to account wipeout.
If the market is going against us, we
should simply accept the small loss and quit the trade. All trading
systems are based on probability or some edge. There is no system
that will only win. Losses are a part of the trading, and what
matters is the positive result at the end of the month or year, not
today’s loss.
Stop Loss of 40
pips, so you will never lose more than 40 pips on one trade.
The general rule
for any system is to NOT risk more than 2 % of your trading account
on one trade.
This means that
if you have account with $2,000 capital, you should risk maximum 2%
of it on one
trade, which is
$40.
Because our Stop
Loss is always 40 pips, you can trade Forex Morning Trade with 0.1
standard lot
(which is 1
minilot, and 1 pip is $1).
If you have
account with $ 10,000 capital, your 2 % risk is $200. Because our
Stop Loss is always 40 pips, you can compute the lots size using the
formula: Minilots = (risked amount) / (SL in pips).
In our case:
$200/40 pips = 5 minilots (which is 0.5 standard lots and 1 pip
equals to $5)
So, with $10,000
capital and trading 0.5 lots, if Forex Morning Trade System wins,
you’ll earn $200, if it loses, you lose $200.
A good rule to
remember: if I use 0.1 lot, then 1 pip = $1. If I use 0.2 lots, then
1 pip = $2 and so on.
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