The CCI indicator was proposed by Donald Lambert in the 80s of the 20th century, and its calculation is based on statistical principles, introducing the concept of the degree of deviation from the average range of stock prices for a fixed period, emphasizing the importance of the average absolute deviation of stock prices in technical analysis. The CCI indicator can measure whether the change tends to be extreme, that is, whether it is overbought or oversold, and is an overbought and oversold indicator. The following will be a detailed description of how to look at the CCI indicator.
1. Calculation method
The calculation method of the CCI indicator is relatively simple and can be calculated by the following formula:
cci（n）=（tp−ma）÷md×0.015
where tp represents typical **, i.e., (highest ** + lowest price + ** price) 3;ma denotes the typical ** moving average over n periods;MD represents the average absolute deviation over an n-period period and can be replaced by the average true amplitude (ATR), etc. The duration of the indicator can be adjusted according to different trading symbols and market conditions.
Second, the characteristics of the index
The characteristics of the CCI indicator compared to other overbought and oversold indicators include the following aspects:
1.It is not necessary to use 0 as the central axis: the range of values of the CCI indicator is not limited to around 0, but fluctuates between positive infinity and negative infinity. This makes it difficult for the CCI indicator to be blunted in the abnormal state of the short-term surge. As a result, investors can better judge the strength of the trend and the turning point of the trend.
2.High sensitivity: CCI indicators are more sensitive to changes in **. It measures the degree of deviation from the typical and its moving average, the rapid response of the deviation or the deviation. This allows investors to capture changes in the market in a timely manner and make corresponding trading decisions in advance.
3.Wide applicability: CCI indicators can be applied to different trading instruments and market environments. Whether it is a market, foreign exchange or other markets, CCI indicators can provide an effective reference. At the same time, the period of the CCI indicator can be adjusted according to specific needs, making it suitable for different trading strategies and timeframes.
3. How to correctly use CCI indicators to operate?
In order to correctly use the CCI indicator, you can refer to the following methods:
1.Market segmentation: Determine the market trend based on the value of the CCI indicator. When the CCI indicator is positive, it indicates a bullish market, at which point investors can lean towards bullishness;And when the CCI indicator is negative, it indicates a bearish market, and investors can be inclined to be bearish.
2.Interval division: The numerical range of the CCI indicator is divided into different intervals, which helps to judge the degree of deviation of the stock price and the market state.
When the CCI indicator is greater than 100, it means that the stock price has entered the overbought range, which means that the stock price may be too high.
When the CCI indicator is less than -100, it means that the stock price has entered the oversold range, which means that the stock price may be too low and investors can buy the dip**.
When the CCI indicator is between 100 and -100, it means that the stock price is in the normal range, the market is in a state of narrow range**, and investors should maintain a wait-and-see attitude.
Fourth, how to use CCI to judge the bottom of the **?
1.Wait for the CCI indicator to fall to the extreme zone: the CCI indicator does not range from 0 to 100, but fluctuates between positive infinity and negative infinity. In the event of an extreme**, the values of the CCI indicator immediately send a signal. In order to succeed, it is necessary to wait for the value of the CCI indicator to drop to the extreme zone below -220.
2.Tentative intervention, pay attention to risk control: When the CCI indicator value reaches the extreme area, you can use the strategy of tentative intervention to operate, but do not intervene with a full position. It is necessary to pay attention to risk control to avoid excessive losses. If the intervention is successful, you should wait for the opportunity for the stock price to reverse to the 5-day flat**, and then get out in time.
3.Pay attention to the trend: The trend also has an important impact on the trend. If there is an upward match, the stock price can be reversed upwards to a 10-day flat or higher. Therefore, when intervening, it is necessary to pay attention to the ** trend to improve the success rate.
4.Pay attention to space and time: When intervening, you need to pay attention to the space between the current price and the 5-day flat ** to ensure that there is a profit opportunity. At the same time, you need to wait patiently for the opportunity of the stock price to reverse to the 5-day flat ** in order to win out.
5. The following methods can be referred to for the CCI index stock selection requirements:
The first method: to open a position based on the previous bottom.
According to the characteristics of the CCI indicator, choose the ** that has fallen to the bottom of the previous period to open a position. The early bottom tends to have a supportive effect, so many ** after the bottom ** can quickly make profits. Here's how:
1.Observe the CCI indicator, when the CCI indicator shows a low value, it means that the CCI indicator may be in the bottom zone.
2.Wait for confirmation signals, such as a sign of a ** stock price, an increase in trading volume, etc.
3.After confirming the formation of the bottom, you can open a position at the right time***
The second method: use the CCI overshoot to select stocks.
Use the over-falling situation of the CCI indicator to select stocks, and confirm it in combination with other technical indicators. The specific requirements are as follows:
1.The CCI indicator has fallen below -200, indicating that ** has been significantly over-falling.
2.A negative J value in the KDJ indicator indicates that ** is currently in a weak state.
3.The price is near the lower band of the Boll indicator or has broken through the lower band, which may mean that an oversold signal has appeared.
4.There is a gap of more than 10% (or close to 10%) between the price and the 5th day**, indicating that *** has deviated significantly and it is possible**.
In short, the CCI indicator can be used as an auxiliary tool, but it should not be used as the only basis for judgment. Investors also need to comprehensively consider factors such as the overall market trend and energy indicators to improve the accuracy and reliability of decision-making. At the same time, risk control is also very important, do not ignore the risk because of the greed for small profits.
Finally, one last thing:PS: Investment is risky and needs to be treated with caution.