CMI – trading on the trend and trendless market.
The CMI indicator is a dual system for making trades both on the trend and against it. This system was first introduced by Daniel Fernandez in an article published in Currency Trading Magazine (August 2011). This is a simple but effective indicator that determines whether the market is directional (a trend in the market) or non-directional (a trendless market). CMI calculates the difference between the closing price of the last bar and the closing price of n bars ago, and then divides this value by the difference between the highest high and the lowest low of these n bars.
The system consists of two separate sets of rules for the trendless and trendless markets (by default, the CMI indicator is configured to work according to these two rules):
Rules of a trendless strategy
Trend strategy rules
The article published in Currency Trading Magazine shows the results of testing on the history from 1999 to 2010 on two currency pairs (AUDUSD and NZDUSD). Only three years during the entire test period were unprofitable. Moreover, for two of them, the loss was less than one percent. Therefore, it is assumed that, given realistic expectations, it is possible to create strategies using the basic concept for trending and trendless market conditions. The last two screenshots show the test results published in the journal.
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- period – the number of candles used in calculating the CMI value
- MApriod – the period of the moving average (blue line)
- usedOnOfflneCharts-enable / disable proper operation on offline charts, such as tick charts, Range bars, Renko, median Renko, etc.