How to Use Commodity Select Index to Inform Your Trading Strategy

The Commodity Select Index measures commodity market strength and momentum, helping traders spot trend shifts, confirm signals, and time entries or exits more effectively.

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In this guide to understanding the Commodity Select Index (CSI), we’ll show you what this chart looks like, explain its components, and teach you how to interpret it.

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What Is the Commodity Select Index (CSI)?

The Commodity Select Index (CSI) was intended by Welles Wilder to be used to select the best commodity to trade by weighing the volatility and trending characteristics of each futures market.

What Does the CSI Look Like?

The chart below of the 100 oz. Gold Futures contract illustrates the Commodity Select Index:

What Are the Components of the CSI?

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 in its calculation.

What Does the CSI Indicate?

According to Wilder, the higher the Commodity Select Index the better the risk-reward setup.

Summary

The Commodity Select Index is yet another technical indicator created by Welles Wilder and chronicled in his popular book, New Concepts in Technical Trading Systems.

Regulated Brokers: Where Can I Trade Commodities?

FAQ

Below are some commonly asked questions about the CSI.

What is a momentum indicator?

A momentum indicator like the Commodity Select Index shows the difference between the price of an asset today and its previous price during a given timeframe. It can be helpful in identifying price uptrends or downtrends. If the momentum indicator is positive, that means an uptrend in the price is sustained, but if the indicator is negative, it means that the price is trending downward.