Channel Trend Forex Trading Strategy

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Channel Trend Forex Trading Strategy

The market is a very unpredictable environment. Price could move in any direction without notice. It could spike, rally, drop, reverse and chop around without warning. Market events could occur at any moment without notice. Central bank governors could release a statement or presidents could start a trade war with a tweet and this could create havoc in the market.

The forex market is much more unpredictable compared to any other type of markets. This is because currencies move for a variety of reasons. It could move due to interest rate changes, a hawkish or dovish economic stance, a risk on or risk off sentiment, a purely business or retail demand and supply of a currency, and so much more. These different sources of push and pulls in currency prices make the forex markets one of the most unpredictable markets.

However, despite the forex market’s unpredictability and volatility, there are still a lot of forex traders who make money out of forex. These traders are the ones who have learned to make sense out of a chart that seems to be very unpredictable. These traders understand that they would never know for sure where the market is going. All they can do is pick the market conditions that is more likely to be predictable and trade only in such markets.

Channel Trend Forex Trading Strategy allows traders to make sense out of a very unpredictable market. It uses indicators that helps traders identify where the market is more likely to be going and allow them to trade with confidence.

Channel Scalper

Channel Scalper is a custom technical indicator that helps traders identify trend direction.

It is a trend-following indicator which is plotted as a line on the price chart. It is plotted below price action whenever the indicator detects a bullish trend, and above price action whenever it detects a bearish trend. The color of the line also changes depending on the direction of the trend. Bullish trends are represented by an orange line, while bearish trends are represented by a lime line.

Channel Scalper, although it is named specifically for scalping, could also be used for day trading and swing trading. It is a versatile indicator which can detect the trend in any market.

It could also be used for a variety of purposes. It is primarily used as a trend direction filter. Traders can filter out trades that are not in line with the trend and scalp or day trade the market only in the direction of the trend. It could also be used as an entry signal. Traders can take cues from the indicator as to when the market has reversed its trend and take trades as a trend reversal setup. Lastly, traders could also use the Channel Scalper as a trailing stop loss. Traders could trail the stop loss behind the Channel Scalper line in order to minimize risk exposure and protect profits.

EMA 5 10 34 Crossover

EMA 5 10 34 Crossover is a custom indicator that provides trade signals based on market reversals.

This indicator is based on the Exponential Moving Average (EMA). It basically provides trade signals based on the crossover of the 5-bar, 10-bar and 34-bar EMA lines. The indicator then plots arrows pointing the direction of the reversal whenever it detects a crossover.

Trading Strategy

This strategy provides trend reversal entry signals based on the confluence of the Channel Scalper and EMA 5 10 34 Crossover indicator.

First, the Channel Scalper indicator should indicate a trend reversal. This will be based on the shifting of the shifting of the Channel Scalper line and the changing of its color.

The EMA 5 10 34 Crossover indicator should then confirm the trend reversal. It should then plot an arrow pointing the direction of the trend as indicated by the Channel Scalper indicator.

The trade is then held open as long as the trend indications are intact. The stop loss should then be trailed behind the Channel Scalper indicator until stopped out in profit.

Indicators:

  • chanel scalper (default setting)
  • EMA 5 10 34 Crossoverl (default setting)

Currency Pairs: major and minor pairs

Preferred Time Frames: 5-minute, 15-minute, 30-minute, 1-hour, 4-hour and daily charts

Trading Sessions: Tokyo, London and New York sessions

Buy Trade Setup

Entry

  • The Channel Scalper line should shift below price action and should change to orange.
  • The EMA 5 10 34 Crossover indicator should print an arrow pointing up.
  • Enter a buy order on the confluence of these conditions.

Stop Loss

  • Set the stop loss below the Channel Scalper line.

Exit

  • Trail the stop loss below the Channel Scalper line until stopped out in profit.

Channel Trend Forex Trading Strategy

Channel Trend Forex Trading Strategy 2

Sell Trade Setup

Entry

  • The Channel Scalper line should shift above price action and should change to lime.
  • The EMA 5 10 34 Crossover indicator should print an arrow pointing down.
  • Enter a sell order on the confluence of these conditions.

Stop Loss

  • Set the stop loss above the Channel Scalper line.

Exit

  • Trail the stop loss above the Channel Scalper line until stopped out in profit.

Channel Trend Forex Trading Strategy 3

Channel Trend Forex Trading Strategy 4

Conclusion

This trading strategy is a high yield type of trading strategy. There may be some losses that could occur from time to time especially when it is used in a choppy market environment. However, this strategy’s bread and butter is in its reward-risk ratio.

This strategy could produce trades that have high yields compared to the risk placed on the trade. This is because trades are kept open as long as the trend in intact. On top of that stop losses are trailed as the Channel Scalper line is moving. This significantly decreases the losses and dramatically improves the reward-risk ratio as the trade is developing.

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