Commodity Selection Index and a Modified Stock Version

Summary

The Commodity Selection Index (CSI) is presented as a way to rank commodities by trend strength before applying a trend-following system. The document describes Wilder’s original calculation as combining ADXR, a 14-period average true range, and factors reflecting leverage, margin, and commissions. Higher CSI values are intended to indicate stronger trends, making the indicator a screening tool rather than a complete entry or exit strategy.

The author says the original formulation is not reliable for stocks and proposes a modified version. It scales a balanced true-range measure by the prior close, smooths it with a moving average, and multiplies it by ADXR. The document supplies formulas but no comparative testing, performance results, or detailed rules for acting on the rankings. The stock adaptation is therefore an author-proposed modification whose reliability is not established by evidence in the text; the indicator’s usefulness would need to be evaluated for the intended market and trading system.

Key ideas

• The CSI ranks commodities by combining trend strength with average true range and trading cost assumptions.
• Higher CSI readings are intended to identify commodities with stronger trends.
• The original formula includes factors for leverage, margin, and commissions.
• The proposed stock adaptation uses a close-relative true range, smoothing, and ADXR.
• The document offers no testing evidence to establish the stock modification’s reliability.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.