CCI Explosion Strategy Review – Money Everywhere…
“CCI explosion Binary System is also a good idea for trading.” This is how the creator of this strategy begins his explanation of the system. I have to admit I am a little confused: I thought the main purpose of a trading strategy is to use it for… trading, duh. But from his sentence I understand the primary purpose of this strategy is not trading, although it could be used for trading also. Then a question arises: What is this strategy mainly used for if trading is secondary? Maybe wood chopping or potato frying? Confused yet? Let’s see if we can clear the fog and if CCI Explosion is indeed a good idea… for trading.
How to use CCI Explosion Binary Options Strategy
First of all you should know I found this strategy on forexstrategiesresources.com and it revolves around trend following and it tries to take advantage of the CCI impulse to offer us profitable trades. All the indicators used for this strategy work on Meta Trader 4 and are available for download on the above mentioned website. Ok, moving on to the rules and indicators: the first indicator I’m going to talk about is called “Two MA” for a simple reason – it’s made of two moving averages and their color will show us the trend. If the lines are Green and Blue, the trend is UP. If the lines are Red and White, the trend is DOWN. So far so good, nothing special but the strategy has an additional filter for trend recognition: the 50 period Exponential Moving Average. The Two MA indicator has to be above the 50 EMA for an Uptrend and below the 50 EMA for a Downtrend. Of course the colors of the two lines have to agree. One picture = 1000 words:
For the time being let’s focus on the upper part of the picture: look at the two Call trades and notice how the Two MA was above the light blue line (which is the 50 EMA). That is considered an Uptrend according to the strategy. Now for a downtrend:
Two MA indicator is White and Red and both lines are below 50 EMA when the Puts are placed. Good, now that we have that out of the way, let’s see what the trigger for an entry is. As you may have guessed, it’s a CCI indicator but it’s not the one built in your Meta Trader 4 and it’s slightly different because it also prints some dots. When we have all the previous conditions met, we need a CCI dot on the 100 level for a Call and for a Put, we need a CCI dot on the -100 level. However, I don’t see why the normal CCI wouldn’t work since they are the same indicator but the dot makes it easier on the eyes. Almost forgot: the CCI has to be set to 100 and the author also mentions that it must turn red for a Put and Green for a Call.
- Two MA indicator lines are Green and Blue
- Two MA indicator is above 50 period Exponential Moving Average
- Green dot appears on CCI at the level of 100 and the CCI turns Green
- Two MA indicator lines are White and Red
- Two MA indicator is below 50 period Exponential Moving Average
- Magenta dot appears on CCI at the level of -100 and the CCI turns Red
Recommended TimeFrame: hourly or higher
Recommended Expiry Time: discretionary
Why the CCI Explosion strategy Doesn’t Suck?
The strategy doesn’t suck because it works… No, scratch that. It doesn’t suck because I believe it has enough filters to keep you out of a bad trade and from my experience, I can tell you that the 50 period EMA is a very good trend indicator. Adding the Two MA to an already good trend indicator can only make it better as this setup combines medium term momentum (50 EMA) with short term impulse (Two MA).
Why the CCI Explosion Sucks?
I’m guessing that while you were reading this article, you got confused once or twice and I believe that is one of the reasons why this strategy sucks. It’s pretty difficult to understand by a newbie so if your trading knowledge is not very vast, it would be a good idea to choose another strategy, which is more newbie friendly.
And My Conclusion on this Explosion is…
I must admit I haven’t spent a lot of time watching how this strategy performs, but from what I could see, the results can be profitable if it’s traded with a conservative approach. In other words, trade only when everything lines up and the lines are nicely spread apart and maybe add an indicator which can help you with identify trend exhaustion or possible turning points. Overall I think it’s not very good and not very bad. The difference will be made by the trader who uses the strategy. As always, a big Thanks goes to the guys who shared this strategy for free.