Welcome! Dear Traders,you are reading my forex trading experiences. Forex trading is a very profitable and very risky business opportunity. If you are a beginner, calm down,have a cup of coffee, and convince yourself that you need to study hard to win in forex trading. Obviously, the task is not easy as the statistics claim that only 5% traders win in forex trading. If you are determined, serious,and hard working, you can surely be included in the group of winners.

HOW TO TRADE FOREX WITH CHOPPINESS INDEX TECHNICAL INDICATOR

In our last post, we learned the forex technical analysis with Awesome Oscillator, an effective technical tool for all types of investors. Now we are going to introduce the the technique of trading forex with Choppiness Index technical indicator, developed by E.W. Dreiss. This indicator does not suggest any entry or exit price rather it indicates the strength of the trend.

Source: metatrader4.com
It is a range bound technical analysis indicator moves within the 0 to 100 range, but some traders even use the 38.2 to 61.8 range.

When the Choppiness Index gives a reading below 38.2 that means the trend has already lost its major energy and supposed to be slower. Below 38.2 readings also suggest that the instrument was trending to a direction for a certain period (CPI period) of time.

When the Choppiness Index gives a reading above 61.8 that means the instrument was not maintaining a trend for a certain period (CPI period) of time.

We can consider the higher readings of the Choppiness index as the time to place an order and the lower readings as the time to close an order.

It cannot be confidently said that the lower readings by Choppiness Index suggest  that the trend will be reversed. But after a lower reading, traders should be more careful in placing an order to the trend.

This technical analysis indicator can be used for scalping, short term trading and medium term trading.

If you have any suggestions, please share with other traders in the comment section below.

You can mention me on twitter @albab247

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