Many traders often get caught up with the quest of searching for the “Holy Grail” strategy. Traders would start scouring the internet for the perfect indicator, the best strategy, the best ideas, and combine things together. They would add an indicator here, a filter there or whatnot, until they find themselves staring at a chart full of spaghetti like indicators. Before they know it, they now have a strategy that too complex for them to handle.
Now, there is nothing wrong with this approach. Many seasoned traders who have been profiting consistently from the market have this approach. But new traders who still cannot handle the pressure of making quick decisions find themselves inundated with unnecessary information.
Sometimes, simple is better. Trading strategies that have been tested and proven by many traders, yet are so simple, many traders overlook it, could be better than complex strategies.
Trading based on channels are some of the most basic strategies that a trader could use. Yet, despite its simplicity, it is still a very effective way to trade the market. In fact, many professional traders who have been profiting from the market use channels in their trading analysis.
Binary Channel BO
Binary Channel BO indicator is a custom indicator that helps traders identify the most recent channels formed on any given currency pair.
This indicator is a very useful indicator because it automates the process of identifying the support and resistance levels, which are the basis of a proper channel.
Different traders take different approaches using this indicator. Some traders prefer to trade breakouts of such channels. This method, although very risky, is also very rewarding. If the breakout turns out to be a “fake-out”, then traders could lose money. If the breakout turns out to be a real breakout, then yields could also be very high. These types of trades are long-term trend reversals that could offer huge returns if managed properly.
Other traders take the opposite approach. Instead of trading on breakouts, they expect price to respect the support or resistance of the channel. They would instead wait for price to show signs of bouncing off the support or resistance of the channel and ride the trade until it shows signs of bouncing off the opposite side of the channel.
Trading Strategy
This trading strategy takes the second approach to trading channels. It trades on bounces off supports or resistances of a channel.
First, we will be using the Binary Channel BO indicator to identify channels. This indicator automates the process of finding channels. As a trader, it is your job to confirm if the channel is valid or not. There are cases wherein the algorithm used by the indicator would plot a channel which does not pass your standards of what a channel should be. If that is the case, then look for other trading opportunities.
Next, we identify the general direction of the trend based on the channel plotted. The trend will be based on the slope of the channel. If the channel is sloping up, then the trend is considered an uptrend. If the channel is sloping down, then the trend is considered a downtrend. Trades should only be taken in the direction of the trend. This produces higher probability trades with a better reward-risk ratio.
Then, we look for indications of a reversal coming off bounces off the support or resistance line. This will be based on reversal candlestick patterns and price action. Take the trade as soon as a reversal candlestick pattern emerges as price touches the support or resistance line.
Indicators:
- BinaryChannel_BO (default setting)
Preferred Time Frames: 15-minute, 30-minute, 1-hour and 4-hour charts
Currency Pairs: major and minor pairs
Trading Sessions: Tokyo, London and New York sessions
Buy Trade Setup
Entry
- The Binary Channel BO indicator should plot a channel that is sloping up.
- Price action must be trending up.
- Visually confirm if the channel is valid.
- Wait for price to touch the support line of the channel.
- Identify if price is showing signs of a bullish reversal based on price action.
- Enter a buy order upon confirmation of the conditions above.
Stop Loss
- Set the stop loss on the fractal below the entry candle.
Exit
- Close the trade as soon as price touches the resistance line and shows signs of price rejection.
Sell Trade Setup
Entry
- The Binary Channel BO indicator should plot a channel that is sloping down.
- Price action must be trending down.
- Visually confirm if the channel is valid.
- Wait for price to touch the resistance line of the channel.
- Identify if price is showing signs of a bearish reversal based on price action.
- Enter a sell order upon confirmation of the conditions above.
Stop Loss
- Set the stop loss on the fractal above the entry candle.
Exit
- Close the trade as soon as price touches the support line and shows signs of price rejection.
Conclusion
Trading channels in this manner is one of the better ways to trade the market. Price action and naked chart traders often use this method of trading. They would start by scanning different charts and plot supports and resistances. If they could observe a currency pair that forms a valid channel, they would wait for price to bounce off its support or resistance lines.
This strategy simplifies the process by automating the process of looking for channels. The indicator plots the channels automatically. All the trader must do is to verify if the channel plotted by the indicator would pass his standards.
When used in a valid channel setup, this strategy produces high probability trades that could also produce high yielding returns.
Forex Trading Strategies Installation Instructions
Channel Bounce Forex Trading Strategy is a combination of Metatrader 4 (MT4) indicator(s) and template.
The essence of this forex strategy is to transform the accumulated history data and trading signals.
Channel Bounce Forex Trading Strategy provides an opportunity to detect various peculiarities and patterns in price dynamics which are invisible to the naked eye.
Based on this information, traders can assume further price movement and adjust this strategy accordingly.
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How to install Channel Bounce Forex Trading Strategy?
- Download Channel Bounce Forex Trading Strategy.zip
- *Copy mq4 and ex4 files to your Metatrader Directory / experts / indicators /
- Copy tpl file (Template) to your Metatrader Directory / templates /
- Start or restart your Metatrader Client
- Select Chart and Timeframe where you want to test your forex strategy
- Right click on your trading chart and hover on “Template”
- Move right to select Channel Bounce Forex Trading Strategy
- You will see Channel Bounce Forex Trading Strategy is available on your Chart
*Note: Not all forex strategies come with mq4/ex4 files. Some templates are already integrated with the MT4 Indicators from the MetaTrader Platform.
Click here below to download:
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