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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.
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