Learn Forex Trading

It is important to trade along the trend. I like to draw the price channel to help to identify the trend. Channel also shows the price range inside which it changes. Have you ever tried to plot the channel on your charts? How often have you succeeded? The challenge is that on the same chart different traders will see different channels. Sometimes even the same trader will drat different channels on the exactly the same period.

There is a great tool in Metatrader 4 toolbox that can help you to plot the channel the right way. This tool is called Channel of Linear Regression. Why do I like this tool? Because it will always plot the same channel between tow points on the same time span.

It is the unambiguity of this tool that I like. That’s make a trading system to give consistent signals. So how you plot the channel of linear regression? It is very easy in Metatrader 4. Go to Insert -> Channels -> Linear Regression. After that the mouse will change the shape on your screen. With this shape now you can plot the price channel by simply clicking at the beginning point and stretch the channel holding the mouse. The result of such action you can see on the image below.

So what’s the reason for trading to become more successful if you use the channel of linear regression?

The answer is simple. The main problem in analyzing the market is to define the trend of the currency pair. Channel of linear regression by its slope give an unambiguous answer to the questions: Where is the price going? Is it going up or down?

I must note though that this tool as many other indicators is based on the past price action. Therefore it can give you the forecast of future price action only with some probability. Anyway it is better to use the momentum of the recent trend defined by the price channel than go against it.

Bookmark It

Hide Sites