channel trading From The Editor

Forex Strategy: What is Channel Trading?

Channel Trading is one of the most common practices in forex strategies. A trading channel is two parallel lines drawn at a resistance and support level that gives traders a sense of security to buy at support and sell at resistance. It is one of the simplest methods used in technical analysis and traders often rely on this to identify optimal levels to buy or sell. Bigger trading opportunities may present themselves when there is a channel breakout, and the probability of a quick significant move increases dramatically. A valid channel must have a minimum of three touches or more and it must be aligned as shown in the image below:

channel trading From The Editor

Types of Channel Trading


Ascending channel is the price action between upward sloping parallel lines that characterize higher highs and higher lows and it is referred to as an uptrend. It is constructed by drawing a lower trend line that connects the swing lows and an upper line that connects the swing highs.

channel trading From The Editor


The descending channel is a chart pattern formed from two downward trendlines drawn above and below a price that represents resistance and support levels. It is defined by a trendline supporting the lower lows and a line connecting the lower highs. It is also referred to as a downtrend.

channel trading From The Editor

HORIZONTAL CHANNELS are horizontal trendlines that join variable pivot highs and lows to show the price within the upper line of resistance and the lower line of support. It is also known as a price range or sideways trend. Traders watch out for a breakout or retain trading within the identified range.

channel trading From The Editor

Channel trading maintains traders in the right direction by keeping them aware of the potential areas of support and resistance in advance. The key to maximizing profit is through implementing a proper risk to reward ratio that always gives huge returns by properly utilizing this method.

Guide to Forex Trading Stratgies

As you explore the different approaches, you will need to learn technical and fundamental analysis as well as mastering the MT4 platform. Copying a strategy without understanding the market movements and the ability to conduct trend analysis is risky.

Fundamentally, you will need to define your investment portfolio and find out your risk/reward ratios (R/R). Each forex investment should come with a solid plan and a good demonstration of trading basics. Avoid copying a forex strategy that doesn’t match your trading goals or strategies that you don’t fully understand and able to know what is the drawbacks of it. There is no perfect strategy in trading that can guarantee profit and in most cases, forex strategies can differ based on the market movements and news.

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