Commodity Selection Index (CSI)

• Commodity Selection Index
• Commodity Selection Index formula

The Commodity Selection Index (CSI) has been initially developed for stock trading, where it was used to find commodities with the highest profit potential for short-term trading.

The CSI indicator was first introduced Welles Wilder in the book called “New Concepts in Technical Trading Systems”.

Commodity Selection Index theory

CSI combines 4 factors, which determine the best commodities for trading.
CSI suggest that the best commodities are:

– high in directional movement (DMI indicator value)
– high in volatility (Volatility Index value and ATR)
– have reasonable margin requirements (relative to directional movement & volatility)
– have reasonable commission rates

CSI calculation example

Although high CSI values imply trending markets characteristics, the indicator is designed for short-term traders who can handle the risks associated with highly volatile markets.