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Choppy Market Index indicator

CMI - Profiting 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):

Range strategy rules

  1. Enter long when the smoothing MA (blue line) of the CMI is below 40 and the CMI line color is red.
  2. Enter short when the smoothing MA (blue line) of the CMI is below 40 and the CMI line color is green.
  3. Exit trades when CMI moves above 50.

Trend strategy rules

  1. Enter long when the smoothing MA (blue line) is above 60 and the CMI line color is green.
  2. Enter short when the smoothing MA (blue line) is above 60 and the CMI line color is red.
  3. 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


Zentrader2015
1063
Zentrader2015 2018.05.29 11:17 
 

I like this one a lot!

cvdestyfx
862
cvdestyfx 2018.03.28 20:28 
 

Two stars for effort. Indicators are known to lag, but the lagging of this indicator is the worst I have seen thus far. I cannot recommend this product.

Note to Publisher: If you improve the lagging problem, let me know and I will adjust my review accordingly.

Yvonne
669
Yvonne 2017.06.15 11:34 
 

This is a brilliant indicator to act as a filter to your trades. It clearly identifies trending and ranging market conditions so you can alter you trading strategy to suit.

Version 1.2 2019.03.30
Code optimization,
Added alerts (Push notification, Email notification, Alert box notification),
Added "buy/sell" signal indication,
Added Trending market indication
Version 1.1 2016.05.25
Indicator parameters:

period - the number of candles that are used for calculation of the CMI value
MApriod - the period of the moving average (blue line)
usedOnOfflneCharts - turn on/off correct operation on offline charts such as tick charts, range bars, renko, median renko, etc.