Choppy Market Index indicator
- Indicadores
- Artur Zas
- Versão: 1.3
- Atualizado: 11 julho 2021
- Ativações: 5
CMI - Profit from trending and ranging markets.
The CMI indicator is a two-part system used to trigger both trend and counter-trend trades, that has been introduced by Daniel Fernandez in an article published in Currency Trading Magazine (August 2011 issue). It is a simple, yet effective indicator, which gauges whether the market has behaved in a choppy (non-directional) manner or trending (directional) manner. CMI calculates the difference between the most recent bar's close and the close n bars ago and then divides this value by the difference between the highest high and lowest low over these n bars.
The system is composed of two separate sets of rules for both the ranging and trending markets (the CMI indicator is configured for these two rules by default settings).
Default settings give the best result on the 1H timeframe. Buy & Sell signals are provided as green and red arrows on the indicator's plot.
Range strategy rules
- Enter long when the smoothing MA (blue line) of the CMI is below 40 and the CMI line color is red.
- Enter short when the smoothing MA (blue line) of the CMI is below 40 and the CMI line color is green.
- Exit trades when CMI moves above 50.
Trend strategy rules
- Enter long when the smoothing MA (blue line) is above 60 and the CMI line color is green.
- Enter short when the smoothing MA (blue line) is above 60 and the CMI line color is red.
- Exit trades when CMI moves below 50.
The approach has been tested in an article published in Currency Trading Magazine using data ranging from 1999 to 2010 on two currency pairs (AUDUSD and NZDUSD). There were only three losing years in the tested period, but two of them were smaller than -1 percent. Therefore, the system suggests it is possible, given realistic expectations, to create strategies using a core concept that can tackle both trending and ranging conditions. The published result can be seen in the last two screenshots.
Indicator parameters
- Period - the number of candles that are used for calculation of the CMI value
- MA period - the period of the moving average (blue line)
- Display alerts in Alert Window - Buy and Sell signals are displayed in the alert window
- Send alerts via e-mail - Buy and Sell signals are sent to e-mail via MT4 platform
- Send alerts via push notifications - Buy and Sell signals are sent to the smartphone via MT4 platform's push notifications
Indicator buffers
- buffer 0 - CMI line
- buffer 1 - CMI line is green (positive)
- buffer 2 - CMI line is red (negative)
- buffer 3 - Signal MA
- buffer 4 - Buy signal
- buffer 5 - Sell signal
- buffer 6 - Trending market indication
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