The Commodity Select Index CSI is used to select the best commodity to trade by weighing the volatility and trending characteristics of each futures market. The higher the Commodity Select Index, the best risk-reward setup.
The chart below of the 100 oz. Gold Futures contract illustrates the Commodity Select Index:
Four main inputs to the Commodity Select Index:
- Directional Movement
- Market Volatility
- Margin Requirements for the futures contract
- Commission Costs
The Commodity Select Index is usually calculated over 14-periods and includes the ADXR (see: ADX) in its calculation. The Commodity Select Index is yet another technical indicator created by Welles Wilder and chronicled in his classic and ever popular book, New Concepts in Technical Trading Systems.
