Channel Trading

A Simple Forex Trading Strategy for

Consistent Profits
Table Of Contents

Introduction
Chapter 1 – What Is a Pricing Channel?
Chapter 2 –Types of Pricing Channels?
Chapter 3 – How to Use a Pricing Channel Step-by-Step
Chapter 4 – What to Avoid
Chapter 5 – Final Comments
Conclusion
Introduction
I want to thank you very much and congratulate you for downloading the
book, Channel Trading–A Simple Forex Trading Strategy for Consistent
Profits .
While there are numerous complex trading strategies, there are also
excellent basic trading strategies that are easy to use and offer high-
probability opportunities for profit. One of the favorites among technical
traders is trading price channels. This is where the price of a security
oscillates between an upper and lower price level, which represent the
resistance and support levels in the market.
In this book, you’ll learn what price channels are, and you’ll be taken—
step-by-step—how to execute a channel trading strategy to help you make
consistent profits as a Forex trader.
Thanks again for downloading this book, I hope you enjoy it!
Legal

© Copyright 2014 Zantrio, LLC. All rights reserved.

All rights reserved. This book contains material protected under U.S.
copyright laws. Any unauthorized reprint or use of this material is
prohibited. No part of this book may be reproduced or transmitted in any
form or by any means, electronic or mechanical, including photocopying,
recording, or by any information storage and retrieval system without
express written permission from Zantrio, LLC.
Risk Disclaimer
Trading in any financial market involves substantial risk of loss and is not
suitable for all investors. Any style of trading in any market condition is
extremely risky and can result in substantial financial losses in a very short
period of time. There is considerable exposure to risk in any transaction
including but not limited to, the potential for changing political and/or
economic conditions that may substantially affect the price or liquidity of a
trade.
Trading is a challenging and potentially profitable opportunity for those
who are educated and experienced in trading. Before deciding to participate
in the markets, you should carefully consider your objectives, level of
experience and risk appetite. Most importantly, do NOT invest money you
cannot afford to lose. Objective, experience, risk of loss, leverage,
creditworthiness, limited regulatory protection, market volatility that may
substantially affect the price or liquidity of a trade, communication failure,
etc. could put you at risk for the loss of some or all of your capital and/or
assets. The possibility exists that you could sustain a total loss of initial
funds and be required to deposit additional funds to maintain your position.
We are not offering to buy or sell and of the financial instruments
mentioned in any service we offer and we are not representing ourselves as
a registered investment advisor or broker dealer.
We do not guarantee or represent that members acting upon any suggestion
mentioned or discussed in any of the services we offer, will result in a
profit. All decisions to act upon any suggestions made in any service we
offer is the sole responsibility of the member.
We will not be held responsible or liable to members or any other parties for
losses that may be sustained while trading. YOUR trading and financial
actions taken are solely 100% YOUR decision and responsibility.
We may hold positions in various financial instruments mentioned in any of
the services we offer and are under no obligation to disclose when a
position was acquired, the amount of position held or when a position is
closed.
We are not an investment advisor, and we do not provide investing advice.
All content provided is for information purposes only.
IN PLAIN ENGLISH: DON'T TRADE WITH MONEY YOU CAN'T
AFFORD TO LOSE. WE DO NOT PROVIDE ANY SPECIFIC OR
PERSONALIZED INVESTING/TRADING ADVICE. YOU ARE
COMPLETELY 100% RESPONSIBLE FOR ANY
FINANCIAL/INVESTING/TRADING DECISION YOU MAKE. WE
ARE NOT LIABLE WHATSOEVER IN ANY WAY, SHAPE OR FORM
FOR ANY ACTION YOU TAKE. BY TRADING/INVESTING, YOU
RUN THE RISK OF LOSING EVERYTHING YOU OWN. YOU KEEP
YOUR GAINS, YOU PAY FOR YOUR LOSSES. END OF STORY.
Earnings Disclaimer
The products and services sold by Zantrio, LLC are not to be interpreted as
a promise or guarantee of earnings. All content provided is for information
purposes only.
Any and all forward-looking statements on our website or in any of our
products are intended to express our opinion of the earnings potential that
some people may achieve. We make no guarantees that you will achieve
any results from the ideas and techniques contained on our website or in our
products.
To the extent that we included any case studies or testimonials on our
website or in any of our products, you can assume that none of these stories
in any way represent the "average" or "typical" customer experience.
In fact, as with any product or service, we know that some people will
purchase our products but never use them at all, and therefore will get no
results whatsoever. You should therefore assume that you will obtain no
results with this material.
YOU FULLY AGREE AND UNDERSTAND THAT COMPANY IS NOT
RESPONSIBLE FOR YOUR SUCCESS OR FAILURE AND MAKES NO
REPRESENTATIONS OR WARRANTIES OF ANY KIND
WHATSOEVER THAT OUR PRODUCTS OR SERVICES WILL
PRODUCE ANY PARTICULAR RESULT FOR YOU. Zantrio, LLC IS
NOT AN INVESTMENT ADVISOR AND DOES NOT PROVIDE
INVESTMENT ADVICE. ALL CONTENT IS PROVIDED FOR
INFORMATION PURPOSES ONLY.
Chapter 1 - What Is a Pricing Channel?
It is quite easy to recognize a pricing channel on a chart. To do this, identify
a pattern similar to the one below, which shows trading of EURUSD. As
you will see, the price is generally falling, but it moves back and forward
between two limits. These limits are not fixed, but fall over time to define
the channel. Simply connect the highs to define the upper channel limit –
the resistance line – and the lower channel limit – or the support line. These
two lines should run roughly in parallel if a true pricing channel has
formed.

The lower support level is where traders are likely to step into the market to
start buying, while the upper resistance level is where they will look to sell
to take profits.
Chapter 2 – Types of Pricing Channels

In the EURUSD example above, the levels are falling, creating a descending
channel, but it is also possible for the levels to rise over time, creating an
ascending channel. Of course, the levels can be horizontal as well when the
security is trading sideways in the market. An example of this type of pricing
channel is shown below.

Here, USDCAD moves into a horizontal pricing channel around 22 April

and continues to trade in the channel through to 30 April July. Note that the
timeframe for this pricing channel is over days, not months as in the
previous example. Pricing channels can form over both short and long
periods, so it is a good idea to look for them at various different time
resolutions.
Chapter 3 – How to Use a Pricing Channel Step-
by-Step
Once you have identified a pricing channel, trading the channel is relatively
straightforward. It is very similar to trading a range, since the support and
resistance lines are a trigger for trading:
As the price approaches the upper resistance line, the expectation
is that the price will then start to fall – this is the point to sell to
take advantage of the anticipated downturn.

As the price drops further and starts to test the support line, the
expectation is that the price will begin to rise again – at which
point, this is a buying opportunity to follow the subsequent
upwards turn.

When the price is between the two levels, traders generally do

not enter or exit the market, which is the same approach that is
used with any support and resistance strategy – which channel
trading is.
Let’s take a look at this using our previous example. As can be seen from
the chart below, the area circled in red is a selling opportunity.

Once one of these selling opportunities occur, you can take advantage of
this by doing the following:
1. Enter the market by selling EURUSD. You now have an open
position.

2. At the same time, place a stop above the level of resistance. This
will make sure that you exit the position quickly if the price
continues to rise – breaking through resistance and exiting the
channel.

3. Place a limit order at the support level – this is the point at

which you expect the price to bottom out and start to rise again.
When the limit order is triggered, you have locked in your
profits.
The orders you need to place are shown graphically on the chart below.
At this point, wait for the price to rise to the upper resistance level again, at
which point there will be another selling opportunity. If the price continues
to oscillate within the descending channel for an extended period of time,
you will have multiple selling opportunities – each of which can lead to a
profit.
On the other hand, with an ascending channel, the trading plan is reversed.
The opportunities arise at the lower support line instead of at the upper
resistance line. In this case, you should buy at the lower support line,
making sure that you have a sell order in below the price so that you will
exit quickly in case the price continues to drop. The time to exit your
position in this case is when the price hits the upper resistance line.
Chapter 4 - What To Avoid

As with any trading plan, you should always have an exit strategy in place
when you are trading a channel. Never forget to put in appropriate stop
orders to exit your position quickly if the price moves in the wrong
direction. It is better to take a small loss than to hope that an unexpected
price movement will reverse itself – prices don’t trade in a channel forever.
Also, don’t get greedy – take your profits when the price hits the target
resistance or support level.
Chapter 5 – Final Comments

Trading pricing channels is a relatively simple and profitable trading

strategy. It is well-suited for novice traders because the channel patterns are
easy to recognize, and the trading plan is also straightforward. At the same
time, it delivers high-probability opportunities for more experienced
traders, making it an invaluable tool in their overall trading strategy.
However, as with any trading approach, channel trading does not offer
guaranteed profits. Traders need to take the appropriate precautions to
minimize any losses and must also exercise trading discipline – they need
patience to confirm that the channel has emerged, and need to stick to their
trading plan once they have entered the market.