Channel Surfing

already begun to form in the direction of your trade, even if it is only

partially formed, you can use this to limit the risk.
However, if there were no clear indication of where to place a stop then
a temporary substitute would be necessary. This can be a prior low or
a certain limit based on bar movement, such as a maximum of three
bars against your trade. For example, if you had entered long and each
succeeding bar crept lower, then when a third bar made an additional low
you would then exit. Most brief pullbacks will be three bars or less.
A maximum bar limit is comparable to another version ofa temporary stop,
the time limit. As mentioned earlier, if price lingers excessively without
reversing direction it can be an indication of a consolidation pattern rather
than a reversal. Sometimes when this happens it is simply better to get out
of a trade when it is convenient. Later, if it does start to go your way you
can look to enter again.

Aggressive Entry
The rule for an aggressive entry is as follows:

Enter when the outside channel line is broken and the developing
secondary channel breaks.
Remember when I said earlier that a spike that extends beyond the outside
channel will often signal a reversal? An aggressive entry takes advantage
of this. In this case you are not waiting for any close, but for a spike beyond
the outside channel line to lose momentum and reverse. This approach has
much higher risks and is not for the faint of heart, but if done properly can
result in profiting l iterally from one end of a move to the other. There are
times when this trade should never be attempted, such as when the market
breaks a major high or low or when a report is fueling the move. A market
should have already demonstrated that it is a strong candidate for this type
ofentry even before considering it. If a market is prone to wide swings and
sharp reversals then it is worth considering, but if it instead tends to be a
slow moving market or one that has had a strong trend that just won't quit
then it is inadvisable to attempt this entry.
Here is how it works; as a market accelerates it will develop a series of
inside channel lines that fan the market tighter and tighter. Earlier we
discussed this phenomenon and used it to signal an exit for locking in
higher profits. The difference here i s that we are now using it to signal

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