Simple Strategy Using SAR and CCI Indicators
Simple strategies often yield better results than complicated systems. They are easier to master and give traders more confidence in making the right decisions.
This strategy combines two widely used indicators: the parabolic SAR and the Commodity Channel Index (CCI).
The CCI (Commodity Channel Index) belongs to the class of oscillators that measure the speed of price movement. It is designed to identify impending market reversals and can be used to assess the strength of the current trend or to identify price extremes (minimums and maximums). In general, the CCI is quite similar to the ADX and can also serve as a tool for determining market trends, as its rate of change reflects the strength of the current trend.
The Parabolic SAR is based on the price chart and is displayed as a series of small dots. In purpose, it is very similar to moving averages, but with higher acceleration and a position that changes depending on the price. When the trend is bullish (upward), the indicator appears below the prices; when the trend is bearish (downward), it appears above the prices.
By observing these two indicators together, we can make informed trading decisions.
Our tests were conducted on the IQ Option broker platform using one-minute candlesticks with a 5-candle expiration time, which corresponds to 5 minutes. Alternatively, you can use Pocket Option or Close Option with similar settings.
We use Japanese candlestick charts, setting the candle duration to one minute each.
The parabolic SAR indicator helps identify the trend:
- When the candlesticks are below the SAR points, the trend is bearish.
- When the candlesticks are above the SAR points, the trend is bullish.
A trading signal occurs when the candles move from one side of the indicator to the other. In other words, the signal appears when a SAR point shows up on the opposite side of the current trend.
The CCI indicator reflects market fluctuations. When the CCI line crosses the centerline, it signals a potential change in trend. (Indicator parameters are specified separately.)
The entry rule is straightforward:
Open a position only when both conditions are met simultaneously — at least one SAR point appears in the opposite zone and the CCI line crosses the centerline.
Video Examples: https://youtu.be/v3FUg5ky884
