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Following the trends – channels

A different way and an extremely popular way of forex trading is to observe and watch channels and various price formations, for example, when the currency pair price escapes the earlier set channel. The buy signal is received, when the exchange rate reaches the appropriate maximum over the timespan of a previously set number of days. The number of days must be figured out by the trader and depends on his or her style of forex trading online. Short term traders would use brief intervals, whereas long term players would set greater intervals. This assumption is based on the definition of a trend. The definition states that when an uptrend occurs, the price highs and lows should be higher in the future. On the contrary, when a downtrend occurs, the price highs and lows should be lower in the forthcoming time. False signals provided by this method are of huge risk. After the exchange rate escapes the observed channel, it may come back to it as well. A proper use of trading platforms can save the trader’s capital. Metatrader has a wide choice of specialized tools to draw and observe channels. In order to assess the Price channel tool in the MT4, click on “Insert” and then “Channels”. You can then choose one of the drawing tools. Meta trader 4 plots the channels in a similar way to the trend lines. This requires two consecutive swing lows or highs. First of all, you need to find 3 pivot or swing levels, that is low, then high and low or high, then low and high. Then, using the channel tool, connect the extremums and connect the last point in the channel to the extremum. There are many types of channels in the fx trading like Fibonacci, Regression and Standard Deviation channels. Acquiring the knowledge of the channels and the theory behind them is a must, it also an early step to get into automated trading. Channels work perfectly with a forex ea, however some say that using a strictly mechanical system lacks creativity and do not apply to market realms

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