| Channeling Stocks (or Rolling Stocks) can be a very | | | | can be entered in ascending channels, riding the price |
| accurate and reliable trading strategy that will provide | | | | upward until the support line of the channel is broken. |
| the trader with exact entry and exit points. | | | | Short positions can be entered in descending channel, |
| When a stock repeatedly moves up and down in | | | | exiting, once price has broken through the resistance |
| waves between two parallel lines it is said to be | | | | line. |
| channeling or rolling. A line is drawn across the highs, | | | | -Trade within the channel. Long positions are entered |
| and one across the lows. This forms the channel. The | | | | as price bounces off the support line, and sold close to |
| upper line is referred to as the resistance line and the | | | | the resistance line. Shorts are entered as price |
| lower line is referred to as the support line. Some | | | | bounces off the resistance line, and covered close to |
| traders choose to trade within the channel and will | | | | the support line. |
| enter or exit the trade as price draws near the | | | | -Trade channel breakouts. This strategy doesn't |
| support or resistance line. Others prefer to trade | | | | provide an exit point. Longs are entered as price |
| breakouts, entering or exiting the trade, once it breaks | | | | breaks through the resistance line and shorts can be |
| out of the channel. | | | | entered when price breaks through the support line. |
| One of the greatest benefits of this strategy is that it | | | | Check for channels in different time frames. Many |
| gives us precise entry and exit points. Greed and fear | | | | times you can predict when a channel will be broken, |
| are a trader's worst enemies, but emotions have no | | | | by checking other time frames. The channel that you |
| place in a system that employs strict buy and sell | | | | are currently trading in one time frame may be an |
| signals, along with stop loss or trailing stop orders. | | | | advance or decline within a channel of a longer time |
| These are the three types of channels: the ascending | | | | frame. Choose the appropriate time frame for your |
| channel, the descending channel, and the horizontal | | | | particular type of trading: weekly or monthly charts for |
| channel. The ascending channel is a rising channel that | | | | long term trading, daily charts for short term or swing |
| is identified by higher highs and higher lows. The | | | | trading, intra day charts for day trading. |
| descending is a downward channel that is identified by | | | | Channel trading is a very simple, yet effective strategy |
| lower highs and lower lows. And, the horizontal channel | | | | that works well for the beginner as well as |
| (also known as the rectangle channel), is identified by | | | | professional traders. As you should, with any new |
| horizontal highs and lows. | | | | strategy, paper trade, before you add channel trading |
| There are several ways to trade channels: | | | | to your trading toolbox. |
| -Trade in the direction of the channel. Long positions | | | | |