CCI Scalping Strategy

The CCI Scalping Strategy indicator is a momentum-based trend-following tool designed to identify short-term entry points by combining the Commodity Channel Index (CCI) with a Weighted Moving Average (WMA). This script automates the logic derived from David Hanson's "Bitcoin Trading Strategies," offering a systematic approach to scalping high-volatility assets.

Usage

The Usage section focuses on the interaction between price trend and momentum oscillators. The strategy is optimized for a 5-minute timeframe but can be adapted to other intervals.

• Long Entry: Occurs when the price is trading above the WMA and the CCI crosses above the -100 level after being oversold.
• Short Entry: Occurs when the price is trading below the WMA and the CCI crosses below the 100 level after being overbought.
• Exit Management: Users can toggle between different stop-loss types to manage risk. While the original strategy suggests using the WMA as a trailing stop, testing indicates that an ATR-based stop often provides better breathing room for price fluctuations.

Details

The strategy relies on the WMA to define the immediate trend direction, ensuring trades are only taken in the direction of momentum. The CCI serves as the trigger mechanism, identifying "re-entries" into the trend when momentum recovers from an extreme level. The script includes a flexible backtesting engine that supports "Direct Position Reversal" and "Trade Reversal" for experimental strategy testing.

Settings

Strategy Inputs

• Strategy Direction: Restricts the strategy to only Longs, only Shorts, or both.
• Strategy Stop Mult: A percentage-based multiplier for the default WMA-based stop loss.
• CCI Length: The lookback period for the Commodity Channel Index calculation (Default: 16).
• WMA Length: The lookback period for the Weighted Moving Average (Default: 5).

General Inputs

• Use Stop Loss and Take Profit: Enables or disables the exit logic.
• Type Of Stop: Selects the calculation method for exits: Strategy Stop (WMA), Swing Lo/Hi, or ATR Stop.
• Swing Point Lookback: The number of bars used to find local highs and lows for swing-based stops.
• ATR Multiple: The multiplier applied to the Average True Range for volatility-based stops.
• Take Profit Risk Reward Ratio: Sets the target profit relative to the initial risk.

FAQ

How do I access CCI Scalping Strategy?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.

Which timeframe is best for this strategy?

While it was originally designed for the 5-minute timeframe for Bitcoin scalping, it can be applied to other timeframes by adjusting the CCI and WMA lengths to match market volatility.

Can I change the risk-to-reward ratio?

Yes, the "Take Profit Risk Reward Ratio" setting allows you to define how much profit you aim to capture relative to your stop-loss distance.