Trader Skills #7 : Channels

Intro

Ah sweet channels.

– They are the bane of a beginner trader I believe.

– Yet now they are my favorite areas to trade.

– For they look so obvious after the fact.

– If you really connected every possible channel on the chart, you would be unable to see anything!

I’m joking, a little.

– But the ability to distinguish between a tight and a broad channel, provides a more forgiving way to trade in both directions.

– Or at least to wait for the setups in the main direction.

– This can help identify how long the market should go to correct

I’m assuming you understand the higher probability response of 2nd entries:

Ch lines – exit or trade back to a test.
Trend lines – enter or trade back to if broad channel (not tight channel.)
Tests back to prior swing pts
Tests BO Points
Failed BO <> Swing point – ie BL trend, failed BO < swing pt.
This can be the trickiest to trade. Double bottom, break below, failed BO and get long for a measured move new high.