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The CCI explained simply

The CCI shows how far the price currently is from its average, measured against the usual deviation. Values above 100 or below −100 count as unusual.

5 min read Last checked: 2026-09-24

CCI stands for Commodity Channel Index. Donald Lambert developed it in 1980 for commodities. Today it's used just as much for stocks, currencies and crypto. Unlike the RSI or the stochastic, it has no fixed upper or lower limit.

What it's about

The CCI swings around zero. At zero the price sits exactly on its average. Values above 100 mean it's unusually far above it, values below −100 unusually far below. By Lambert's maths, about three quarters of all values lie between −100 and 100.

An example: a stock's CCI jumps from 20 to 180. The price has moved far from its average in a short time. Whether it comes back or keeps going, the CCI doesn't say.

How it's calculated

For each day you take the typical price, the average of high, low and close. Then you compare it with the average of the last 20 typical prices. You divide the gap by the average deviation over those 20 days, times a fixed factor of 0.015.

With numbers: the typical price is €52, the average €50, the mean deviation €1. Then the CCI is 2 divided by 0.015, so about 133.

What signals traders read from it

  • Above 100 or below −100: Some read a rise above 100 as the start of an uptrend, others as a sign the price is stretched.
  • Back above −100: When the CCI climbs back above −100 from below, some see a buy signal after a decline.
  • Divergence: The price makes a new high, but the CCI doesn't.

Where it misleads you

You can already see the problem in the signals above: the same number is read by some as a trend starting and by others as overstretched. The CCI itself doesn't decide. If you use it, you need a clear rule for which reading you apply, and you have to stick to it over many trades.

Because there's no fixed limit, the CCI can reach extreme values like 300 in strong moves. So a value of 200 is no reliable sign that the move will end soon.

An example trade with made up numbers

Emma has €10,000 in her account and risks at most €150 per trade. After a decline, a stock's CCI climbs back above −100 from below. Emma buys at €20 and sets her stop loss at €19. With that distance, she buys 150 shares for €3,000. Costs: €1 each to buy and sell, plus about 2 cents of spread per share on each order.

If it works: The price recovers and Emma sells at €22. Emma is €300 ahead. After €2 in fees and €6 in spread, €292 is left.

If it goes wrong: The recovery was brief and the price keeps falling. The stop fills at €18.90. That's a €165 loss, €173 with costs.

Emma has a fixed rule for the CCI. Whether it pays off only shows over many trades, not in a single one.

Price and CCI over the same periodPriceCCI (20 days) · limits at +100 and −1001000−100far below −100far above +100zerotoinvest.com
Price and CCI over the same period Made up price data, the CCI is calculated for real (20 days). Values above 100 and below −100 count as unusually far from the average.

Summary

  • The CCI shows how far the price is from its average.
  • It has no fixed upper or lower limit.
  • The same values are read very differently depending on the rule.

Did you get it?

What does a CCI of zero mean?

That the typical price sits exactly on its 20 day average.

Why is a CCI of 200 not a reliable sell signal?

Because the CCI has no fixed upper limit and can rise much further in strong moves.

What is the factor 0.015 for?

It's chosen so that most values lie between −100 and +100.

Sources and further reading

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