- Commodity Selection Index
- Commodity Selection Index formula
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.