How CCI works on the stock exchange

CCI (Commodity Channel Index) - indicator

The CCI (Commodity Channel Index) was only developed by Donald Lambert in 1980 and was first used on the commodity futures market. However, there is nothing to prevent this indicator from also being used for "normal" securities. The CCI takes into account momentum and price. It works particularly well in sideways movements with a clear sideways trend channel ("trading zone")!

Börse Online writes the following about the CCI:

The CCI belongs to the group of trend followers. It indicates the distance between the price and a moving average line. In a first step, the mean value of the high, low and closing prices for one day is calculated. The mean deviation from the moving average is determined from this so-called significant price.

The signals from the CCI

In contrast to many other trend followers, the zero line itself has no meaning for this indicator. In general, two more lines are entered at 100 and -100. If the indicator moves between the two lines, one speaks of a trendless market. The following signals must be observed:

  • If the CCI indicator crosses the line at -100, this is a buy signal
  • If the CCI indicator falls below the line at +100, it is a sell signal
  • Divergences between CCI and price development indicate a change in trend
  • I use the CCI (20) and CCI (35) mainly as a filter signal for the MACD and also to discover divergences! The results of the CCI are definitely worth seeing!



Volkswagen with CCI signals

Course dates: Lenz + Partner AG

Overlay CCI

In the diagram above, the trading signals result from the superposition of the CCI (20) and CCI (35). Here, too, the buy and sell zones and the neutral zones, in which there is usually a sideways movement, are beautiful.


DAX with superimposed CCI signals

Course dates: Lenz + Partner AG

Overlaid CCI

The same system has been applied to the DAX since 1994. I think this picture saves further words about the effectiveness of this overlaid CCI?
As with all "trading systems", there is no such thing as a functioning trading system consisting of just one indicator! Otherwise the stock exchange would be a one-way street! If the systems shown here have worked in this case, there is no guarantee for the future!