Use the Commodity Channel Index indicator when trading Forex or Binary Options

The CCI indicator helps binary options traders separate genuine trends from market noise and keeps them informed about their risk of going into reverse

The Commodity Channel Index also known as the CCI indicator by those who trade binary options has become an invaluable tool for savvy traders. It has been around for more than three decades but it underwent several changes, so that the indicator used today has little in common with the original. Just as the name suggests, this indicator distinguishes between real trends and market noise for binary options that have commodities as underlying assets.

How to interpret the CCI readings

Determining the direction in which the market is heading is just as difficult for commodities as it is for other assets, but a correct read on the Commodity Channel Index indicator simplifies things greatly. The CCI differs from other indicators by using just one line that oscillates between values on -/+ 200, but a strong trend emerges at half of these values. An uptrend is detected when the indicator moves above +100 and a downtrend emerges when the values sink below -100. The amplitude is broad enough to avoid misreads caused by market noise and to point users in the right direction.

A firm grasp over the readings provided by the CCI indicator will enable you as a binary options trader to make decisions without having second thoughts. The problem is that few trends move firmly past the +/- 100 and not long after they do, enter the inevitable reverse, which means that traders need to pick up on them quickly. The best course of action is to use this indicator in conjunction with others, so that you can spot a promising trend even before the CCI gives the go ahead.

Know when to enter a trade

Being late at a party is unpleasant in normal circumstances but can be downright dramatic when you are trading binary options. Many beginners are spending a lot of time trying to predict ones and overplay their hand when they find one that seems rock solid. In the absence of a reliable indicator as the CCI. the binary options trends based on commodities that seem to be obvious are in fact a mirage. By entering the trade too late, the trader extracts a tiny profit and exposes himself to massive loses caused by the reversal.

The CCI Indicator makes you aware of any window of opportunity and also tells you how long it is likely to stay open and when it is a good time to exit the trade. As soon as an asset enters the overbought or oversold areas, alarm flags are risen and traders are advised to close their positions. The readings can seem complicated for someone with no previous experience in this line of work, but once the rules are understood, trading enters auto-pilot. To learn more about binary option signal providers check this site .