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In your trading journey, you will come across many different methods. Some will use the candlesticks or chart patterns, some will be based on the indicators. Some will even combine a few tools. This is exactly the case for today's strategy which connects three popular oscillators.
Key Takeaways🔑
| →This strategy combines three popular oscillators: RSI, Williams %R, and CCI. |
| →Adjust the settings of each oscillator for optimal results: RSI(7), Williams %R(14), and CCI(20). |
| →Practice this strategy on a free demo account before trading with real money. |
Three oscillators together in one strategy
We will use 3 indicators together to create a powerful trading strategy. All three are from the oscillators group. The first one is the Relative Strength Index, the second is the Williams Oscillator and the last one is the Commodity Channel Index.
How to set up your chart
Once you are logged in to your IQ Option account, choose the asset and the Japanese candlesticks chart type. Then proceed to the indicators icon. Find each oscillator and add them one by one to the chart. To use today's strategy effectively you will have to change the RSI period to 7. The settings of the Williams %R remain as default. You will have to change CCI period to 20.
The RSI oscillates in the range from 0 to 100. There is the middle line at the level of 50 and two others at 30 and 70. These two lines indicate the overbought and oversold areas.
The Williams R has the period set at 14. It shows the overbought level at -20 and the oversold at -80.
The CCI has the default period of 20 and the overbought and oversold levels are at 100 and -100.
Trading with the strategy that combines three different oscillators
The RSI + Williams R + CCI strategy can be used on 5 minutes up to 60 minutes timeframes. The expiration time depends on the chart timeframe you are using. Generally, it may be 2 to 3 times longer than the period of your chart.
We have 3 different oscillators added. You will follow them and wait for the trading signals. Mind that it is enough to receive signals from two indicators only.
Going short
A trade for the price decrease can be open when the oscillators cross the overbought level from above.
Take a look at the chart below. The RSI and the Williams R leave the overbought zones and move towards the middle lines. The CCI does not cross the line yet, however, you have received two signals and that is enough to enter the trade.
We have a 5-minute chart here, so the short position can be hold for the duration of 2-3 next candles.
Pros and Cons of the RSI, Williams %R, and CCI Strategy 😊😞
Pros:
- Combines the strength of three popular oscillators for improved accuracy.
- Applicable to various timeframes, offering flexibility for traders.
- Allows for the identification of potential overbought and oversold conditions.
Cons:
- May generate false signals, especially during times of high market volatility.
- Requires a certain level of familiarity with each oscillator's settings and interpretation.
- Not a standalone strategy; additional technical analysis may be necessary.
| Oscillator | Key Features |
|---|---|
| Relative Strength Index (RSI) | Measures the speed and change of price movements; ranges from 0 to 100, with overbought and oversold levels at 70 and 30, respectively. |
| Williams %R | Measures overbought and oversold levels in the market; ranges from -100 to 0, with overbought and oversold levels at -20 and -80, respectively. |
| Commodity Channel Index (CCI) | Measures the deviation of the current price from its average price; overbought and oversold levels are at 100 and -100, respectively. |
Going long
If you want to enter a long position, you should wait for the oscillators to leave the oversold zone and move upwards. If 2 or 3 indicators intersect the oversold level from below, you can enter a trade.
Below you will find an example where again, two out of three oscillators have produced trading signals. They cross oversold levels on their way up. You can now open a transaction and hold it for the duration of 2 to 3 candles.
Conclusion
When you hear about the triple oscillators strategy for the first time, you may think it is too complicated to use in everyday trading. But when you start to learn about it, you discover it is not difficult at all.
Three indicators, the Relative Strength Index, the Williams Oscillator and the Commodity Channel Index are connected in one. They all show the oversold and overbought zones and this is the main thing. All you have to do is to follow their lines to see whether one of these areas is being crossed. When 2 or 3 indicators are giving the same signals, you can enter the trade.
The strategy can be used on the timeframes from 5 to 60 minutes. The duration of the transactions should be 2 or 3 times longer than the timeframe of the chart you are currently using.
Do not forget IQ Option offers a free demo account. Open it now and check how you like trading with 3 oscillators. The next step will be to shift to the live account and invest real money.
Wish you high profits!
Common Questions About the RSI, Williams %R, and CCI Strategy 🤔
- Q: Can I use this strategy for different assets?
- A: Yes, this strategy can be applied to various assets, including stocks, forex, and cryptocurrencies. However, results may vary depending on the specific asset and market conditions.
- Q: Can I modify the settings of the oscillators?
- A: Yes, you can adjust the settings of each oscillator to better suit your trading style and preferences. However, make sure to test any changes in a demo account before applying them to real trades.
- Q: Is this strategy suitable for beginners?
- A: This strategy may require a basic understanding of the oscillators used. Beginners are advised to familiarize themselves with each oscillator and practice on a demo account before trading with real money.
- Q: How do I know when to enter a trade?
- A: Wait for at least two of the three oscillators to signal a potential overbought or oversold condition. Keep in mind that additional technical analysis may be necessary to confirm these signals.
- Q: What is the ideal expiration time for my trades?
- A: The expiration time should be 2 to 3 times longer than the timeframe of the chart you are using. For example, if you are using a 5-minute chart, the expiration time should be between 10 and 15 minutes.