Introduction

It is always tempting to react to price movements, but doing so to each one may not be a good idea. If you react to each and every price move, your transaction costs could be comparatively more than your profits! To avoid this situation, you could use filters or identify specific patterns and build a trading strategy.

 

Creating a trading system is always a good idea, and keeping it simple is even better. So a totally free yet simple strategy that produces high returns for low risks could make all the difference to your trading.

 

With this in mind, I present this strategy based on a redisigned version of the CCI indicator and a specific yet seemingly unused chart pattern.

 

Unlike many system that are given away free over the internet this is not an observational strategy. The logic behind this methodology is a technical phenomena and a unique method of using the CCI oscillator enabled by knowledgeable participants reacting to information impulses and trading currency markets accordingly.

 

This methodology takes advantage of the short-term/mid term trends in the market and applies a simply yet surprising trading technique to earn superior returns.

 

The trading system evolves around the technical phenomena which is critical to and forms the essential basis of the system, described as A-D below. Complete understanding of A-D below, in the way described in this document will enable any user of this trading strategy to trade with high probability and low risk.

 

These technical indicator based set-ups/patterns are based upon;

• Understanding of the unique way the strategy utilises the CCI oscillator.

• Identifying when the CCI oscillator by means of extreme oscillator readings and price action to produce a 'set-up'.

• Identifying when the CCI oscillator by means of extreme or normal oscillator readings and price action to produce a 'signal'.

• Finally, identifying price action as the trigger to entering the market.

 

Note: While this is the basis of the system, there are other factors, given later, that need the traders attention to ensure maximum profitability.

 

Once this analysis is complete the aim is to identify price action as the trigger at one of the technical indicator based set-ups that indicate a high probability trading opportunity has arisen.

 

Consistency is the key to longevity in any market. Professional traders wait for the probability of a successful outcome to be substantially weighted in their favour indicated by the confluence of technical conditions that suggest a high probability trading opportunity. The confluence of the three technical factors B-D give rise to high probability trading opportunities.

The trading system analyses price from the the users chosen time-frame and the redesigned CCI oscillator to produce high probability, low risk trades.

 

The trading system could be used on any time-frame' however, it should be noted that it becomes more difficult to produce attractive gains on smaller time-frames. Conversely, using the trading strategy on the higher time-frames does produce more attractive gains.

 

This trading system can deliver gains in all forex markets but demands of the user, their active attention and engagement with the market not least in the identification of the prevailing price action and the memorising of the indicator based set-ups that enable high probability trading opportunities.

 

Happy trading... Fred Proffitt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technical Indicator Based Set-Ups

The trading system set-ups are based upon the technical phenomena of the CCI oscillator reaching extreme levels coupled with price action reversals, giving rise to high probability trading opportunities, and the trading edge provided by this trading system.

'A 'Trading Edge' has been described as ‘…having an historically higher probability of one outcome over

any other.’ To this extent all that is known about a trading edge is that historically over a sample it has

repeated itself leading to over-all profitability'.

Identifying potential trades

When the user has a complete understanding of the unique method the system utilises the 'CCI oscillator' (A) and the prevailing overall conditions have been established. The first step is for the user to, by means of extreme oscillator readings, locate the 'Set-up' (B). The second step is to identify by means of both extreme and/or normal oscillator readings to discover the 'Signal' (C). Finally, we need to identify through price action alone when the 'Trigger' (D) is required to enter the market.

 

Most technical indicators look back to calculate their present value and as such are described as 'lagging indicators'. The only way previously thought to use a lagging indicator as a potentially leading/predictive indicator was with divergence from the price action. However, this trading system shows that utilised in new ways the CCI indicator can also be employed by the trader as a leading/predictive indicator.

It is only extreme oscillator readings that forms the basis of the essential first component of the indicator set-ups. Oscillators measure momentum, so any change from price action in such an indicator suggests an exhaustion of the current price action direction and momentum. This forms the basis of the essential first component of the indicator set-ups.

• CCI indicator: due to the unique methodology of how the trading system interacts with the CCI indicator is essential that the trader have a full and comprehensive understanding of the following two rules.

• The CCI indicator normally has a +100 and a -100 line on the oscillator screen, this in turn creates a central section which is important in normal usage of the indicator.