The Commodity Channel Index Indicator: Interesting Facts to Discover

Jul 24 • Forex Indicators, Forex Trading Articles • 2958 Views • 2 Comments on The Commodity Channel Index Indicator: Interesting Facts to Discover

Countless novices in forex trading continue to search for information regarding the Commodity Channel Index Indicator. As to be expected though, such individuals often only focus on matters about basic analysis. It should be emphasized that only those who seek knowledge about the various facets of the aforementioned oscillator would be able to fully appreciate it. In a similar sense, it is appropriate to say that only those who take time to learn about the not-commonly-discussed aspects of the Commodity Channel Index would be able to utilize it in the most effective manner.

It seems that only a handful of people realize that the Commodity Channel Index Indicator is not originally designed as a tool for forex traders. To explain, the aforementioned tool’s creator, Donald Lambert, mainly wanted to develop a means of predicting upcoming upswings and downswings. Instead of focusing on currencies however, Donald Lambert created the Commodity Channel Index with commodities in mind. It is for this very reason that many are perplexed as to why experienced forex traders opt to use a “commodity” oscillator as a guide while engaging in all sorts of currency trading endeavors.

While certain people are intrigued by the Commodity Channel Index Indicator’s name, there are those who merely pay attention to its reliability as a predictive tool. As a matter of fact, there is an abundance of forex traders who claim that computing for the Commodity Channel Index value is the best means of identifying the most lucrative of opportunities yet to emerge. One should always keep in mind though, that the aforesaid oscillator is far from perfect. Simply put, it would be a foolish decision to solely rely on the information provided by such an aid to currency trading. Indeed, attaining superb prediction accuracy requires multiple oscillators.
 

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For some, it is surprising to find out that the Commodity Channel Index Indicator is not the definitive prediction tool that they believe it to be. Individuals who have been assessing the formula used for computing the Commodity Channel Index value on the other hand, would be shocked upon finding out that the constant merely serves a simple purpose. In particular, the aforesaid oscillator’s creator just decided to utilize a constant of 0.015 to make sure that readings and graphs are always easy to understand. After all, by changing the value of the constant, the resulting data would no longer follow the -100 to +100 range.

To reiterate, Donald Lambert did not develop the above mentioned oscillator as a tool for forex traders but instead as an aid for those who trade commodities, hence the name Commodity Channel Index. As also mentioned, while widely praised by both novices and experts alike, the Commodity Channel Index is far from perfect: making predictions as reliable as possible is a task that necessitates the use of multiple oscillators. As revealed as well, the constant utilized in computing for the Commodity Channel Index value is nothing more than a means to even out the data. Indeed, the Commodity Channel Index Indicator has more than a few interesting secrets.

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