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Commodity
Selection Index
Description
The
CSI is calculated using the ADXR component of the Directional
Movement indicator (hyperlink).
Refer to New Concepts in Technical
Trading Systems for information on the
calculation and interpretation of the indicator.
Interpretation
A
high CSI rating indicates that the commodity has
strong trending and volatility characteristics.
The trending characteristics are brought
out by the Directional Movement factor in the
calculation--the volatility characteristic by the
Average True Range factor.
Wilder's
approach is to trade commodities with high CSI
values (relative to other commodities). Because
these commodities are highly volatile, they have
the potential to make the "most money in the
shortest period of time."
High CSI values imply trending
characteristics, which makes it easier to trade
the security.
The
CSI is designed for short-term traders who can
handle the risks associated with highly volatile
markets. |
