The Channels Indicator For MT4



Table Of Contents:

  1. The Channels Indicator For MT4
  2. Trend Continuation Trading With The Channels Indicator For MT4
  3. Reversal Trading With The Channels Indicator For MT4

The Channels Indicator For MT4 is a very complex indicator with a lot of mathematical calculations. It draws trend channels of all available time frames fully automatic onto your chart. In MT4 these are the time frame M1, M5, M15, M30, H1, H4, D1, W1 and M1. With the help of this indicator you can easily keep an eye onto the bigger picture while you are triggering your trades on lower time frames.

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With the Channels Indicator For MT4 you can do trend continuation trading and reversal trading.

For trend trading you can use 2 or more trend channels that point into the same direction. For reversal trading you can use the Channels Indicator For MT4 to spot extremely overbought and overbought conditions by waiting for the price to move outside of 2 or more trend channels at the same time.

Trend Continuation Trading With The Channels Indicator For MT4

As mentioned above, you can use the Channels Indicator For MT4 to detect trend trading opportunities. You should use a trading instrument where 2 or better 3 channels of the higher time frames are pointing into the same direction.

If you use 3 channels then the smallest channel is used to do the entry timing. As you can see from the following screenshot the direction of 2 bigger trend channels is downward.

Now you look for the next smaller trend channel. If that smaller trend channel is also pointing downward then you have a trend trading situation. In our screenshot we found exactly this situation where 3 trend channels are in harmony:

The marketing is swing downward on different trend sizes. The swings in direction of the trend are on average bigger and faster than the swings against the direction of the trend. These strong moves are also the reason why most traders prefer trend trading.

Now that you identified an instrument that shows a downward trend on 3 different trend channels, you can use the smallest trend channel to pin point your entry. The best position of an entry within the smallest trend channel would be near the upper boundary of the smallest trend channel. 

Opening a trade near the upper boundary of the trend channel will give you the biggest profit potential because there is a lot of room to the downside. 

For buy setups you would search for an instrument that shows 3 trend channels that are pointing upwards. The smallest trend channel would be used to trigger the entry again. A good buy entry would be at the lower boundary of the smallest trend channel, because then there is a lot room to the upside to produce a big winning trade. 

Reversal Trading With The Channels Indicator For MT4

The Channels Indicator For MT4 can also be used to detect counter trend trades. Counter trend trades are against the direction of the current trend.

If you make your entries in extreme overbought and oversold situations, the counter trend trades have a high probability of success and a huge profit potential.

So how to detect these high probability setups with the Channels Indicator For MT4?

The Channels Indicator For MT4 makes it really easy for because it draws the trend channels even into the future. If you follow the drawings of the trend channels to the right side of the chart then you can easily spot the areas where a smaller trend channel leaves a bigger trend channel.

If the price follows the smaller trend channel then the price moves automatically outside of the bigger channel. From the view point of the bigger channel the price is now in overbought or oversold condition.

Now you wait until the price moves outside of the smaller channel. In that moment the price is outside of the smaller channel AND outside of the bigger channel. You can now speak of extremely overbought or oversold conditions.

You can spot the next overbought and oversold condition in the same chart that we used for our trend trading example.

The lower left circle shows an extreme oversold condition. If the price moves into that area then there is a very high probability that the price will bounce upwards.

In the upper right circle you can see an extremely overbought condition. If the price moves into this region then you can expect the price will be rejected to the downside. 

 Have fun with this great indicator! Happy trading :)

 

About Me

I'm Mike Semlitsch the owner of PerfectTrendSystem.com. My trading career started in 2007. Since 2013 I have helped thousands of traders to take their trading to the next level. Many of them are now constantly profitable traders. 

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