Channel Surfing

A word of caution when using this entry; ifprice in the secondary channel
exceeds the previous high or low established by the prior trend, then the risk
is dramatically increased and the trade should be avoided. At times price will
exceed this prior level and the trade still goes on to be successful, but the
odds in favor ofthis are greatly reduced. Additionally, if a market goes into a
trading range it is more likely to continue the prior trend. In either ofthese
cases it is best to look for a point to exit.
If the trade unfolds the way as it is suppose to, then you have reason
for additional confidence in the trade. First, you already have a break in
the original channel, indicating a trend change. Second, you also have
the break of the additional channel, giving more strength and weight to
the trade. But there is an added bonus here. Often a smaller secondary
channel will set up the second point from which an inside channel line for
the entire new trend will be drawn off of. So entering at the break of this
channel will usually be very close to an optimal entry.
So this particular entry offers one ofthe best approaches to entering a new
trend. While there is still no guarantee that the trade will be successful,
this entry offers some extra bonuses that put more ofthe odds in your favor
which is what trading is all about. Of all the entries that we have discussed
so far, this is the most important one to learn. This is the preferred entry
when first starting out and the one that I encourage you to use the most.
The prior entries depend on the skill that you develop and are used
primarily with markets that frequently swing. The negative aspect of this
trade is that you will miss a few trades that fail to return to kiss the channel
good bye. If this should happen, then you need an alternative entry.
If you miss your queue on any of the previous entries and a new trend has
al ready established itself, another approach will be needed that allows
you to enter a trend in progress. Additionally, it is not uncommon to find
long established trends that almost a guarantee a profit if you just enter.
Whether you are dealing with long established trends or short-term swings,
it is always important to enter when there is a low amount of risk. Even
long-term trends come to an end eventually. Although the trend entry still
has risk associated with it, it is perhaps the most conservative and safest
entry of the group.

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