This Channel Trading Strategy can be a huge difference maker in your trading arsenal. In this article, I am going to show you why going off on “rabbit trail” is not such a bad thing after all! I will also show you a forex channel trading system, trend channel trading strategy, fx analysis, and much more in this article. This strategy is all about taking advantage of the price movement that is moving away from the normal price action. When I say the “norm” I am referring to what we call a channel. We want to escape this channel and enter on our rabbit trail to pip glory! A channel is simply a price movement that uses support and resistance in the past to validate what it will do in the future. The price movement will hit these points and “bounce” back into the channel. It goes back and forth but never exits the area. This type of movement creates a channel on the charts. Now since we know what a channel looks like let’s look at the different types for this forex channel trading strategy. There needs to be at least two support and resistance levels to validate a channel! The support and resistance points are marked on the pictures above. You can see in the three examples above that they all have at least 2 levels of each. When constructing these channels, ALWAYS remember that both lines need to be parallel to each other. Do not force trend lines to look like a channel. If they aren’t parallel then it is clearly not a channel that formed. Helpful information: If you are completely new to this type of trading dive into some charts and do some channel work. Simply go back in time on the charts and draw yourself some channels. If they match what you see above, perfect! Keep doing them! Once you did about 100 of these it should be fresh on your mind and you will be ready to master a trading strategy that mainly focuses on these channels. The first thing you need to do to get this strategy started off is you need to find a channel on a four hour or one hour chart. Remember there must be two resistance and support points to validate a channel. Sorry for that rabbit trail, let’s get back to this strategy! So below is a prime example of a horizontal channel. This is AUDNZD chart taken on a 60-minute time frame. Not too bad. So basically all you are doing here is drawing parallel lines. I added the color where the channel is highlighted. Just as long as both of your lines are parallel to each other. The way you find the trade is to find a breakout of the channel. In a perfect world the support and resistance levels will hold on forever.. But the world isn’t perfect.. So that’s why we have what is called a breakout. Below the breakout candle is marked. This was taken on a one hour chart. In this strategy the one our chart we use to find a breakout. This breakout happened on the top of the channel. So that means you will BUY. If the breakout happens on the bottom of the channel then you will SELL. Great! We have breakout candle let’s get in the trade and follow the rabbit trail to pip glory! Why wait? Because the market is money grabbing machine, and they want your hard earned cash! You wait because sometimes the market does a “head fake” and turns against you. Look at the example below for proof of this. So if you would have got in this trade right when it broke out of the channel you would soon have got stopped out. That is why it is so important to Wait for it to pull back. So back to our original example, you see below the pullback we are talking about. This is where many people struggle. They see that it broke out so they want to click BUY or SELL right now!!! This trade would not have burned you, but countless other trades would have! We are getting so close to getting on our rabbit trail to make some serious pips! Our lines are drawn, we identified the breakout, and waited for the pull back. It is now time to make our trade. The criteria to make an entry after a pull back on a 15 minute chart to enter a trade is that there must be two 15-minute candles that support our trade. If it is a BUY trade we want to see TWO bullish candles after the pull back. If it is a SELL trade we want to see TWO bearish candles after the pull back. In our example we are using we would need to see two green bullish candles after a pull back to enter a trade. Below is where we would enter. Enter after the two bullish 15 minute candlesticks close. You may be think oh no! The trade went the wrong way, get out now! We are not worried about that because our strategy told us that the breakout occurred and we are moving up! This is probably one of the most important rules of the strategy. You always need to place a stop loss somewhere for a reason. If you are throwing in stop losses 5 to 10 pips from your entry order just because someone told you to do it, then you are without a doubt treading some dangerous waters. In a Buy The stop loss will be placed in the channel below the last support point. In a SELL The stop loss will be placed in the channel above the last resistance point. In our example you can see where the stop loss was placed. That way if it does come back in the Channel it will hit the support level and end up going back up in a bullish movement. The last thing you need to do is know when to exit. This strategy goes for a 50 pip target. The rabbit trail may be 2 hours, or could take as long as two days. Stay in the trade and remember your rules. You are going for a 50 pip breakout trade! To Learn Another strategy, check out the trend following strategy article here. Like this Strategy? Grab the Free PDF Strategy Report that includes other helpful information like more details, more chart images, and many other examples of this strategy in action! Tap on the E-Book Cover Below to get your copy of this Free strategy today. Really easy to follow steps there! Glad to assist! We hope this helps you and your trading success! Very well explain in simple words and charts, However Entry not very clearly understood, further Risk Reward seems not matching. Thanks! Your entry is to be placed after a pull back on a 15 minute chart. The stop is placed below the last support or resistance in the channel. The goal is 50 pips so risk reward will vary depending on where your stop is placed in the channel. Rabbit Trail is simple, time-tested and trust-worthy stretagy. You are very welcome! We hope you will find great success using this strategy! No problem! Glad to help. Wow guys everytime i see the name J Crawford or Trading Strategy i know im in for a trading tips treat!!You guys are awesome..Ive learnt how to use the Ichimoku and some good scalping strategies eg LazyRiver..Soon i will be equipped enough to venture into trading!Thanks a lot and please keep up the good work.. Great to hear! We love hearing your guys feedback. Keep studying and use that demo account to your advantage! Have a great day! Thanks for the strategy! Just for clarity do I make the entry on the 15min chart or on 1 hour chart where I identified the breakout. Can the strategy be utilised by swing traders too Yes this strategy uses the 15 minute chart to identify the break and go if you want to call it that. So once you see a pull back candle that closed on a 15 minute chart, you wait for two 15-min. candles to close then you make your entry. So the example I used you had to wait for two bullish candles to close on a 15 minute chart in order to make the entry. Hope this helps! you lost me after the break out non trade. Thank you for the information. These strategies can be built upon and reconfigured . Looks great. I was just studying channel trading, and this may really come in handy. This is a great strategy! Thanks a lot! It would be great to have the CTI Trading Tool indicator that would trade the Rabbit Trail Strategy! Does this strategy work in all markets like or only Forex Hey Girish! Thanks for the question. This strategy will work in all markets on any time frame. We recommend on lower time frames lowering your target area to 20-30 pips instead of 50. With that small tweak the results are great for those scalpers out there who want to use this strategy. It would be great to have the CTI Trading Tool indicator that would trade the Rabbit Trail Strategy! Great! We hope you like it when we launch this indicator out to the general public! The indicator would make short work of trying to identify these channels. Would look forward to that! CTI makes it completely effortless since it will draw them for you on every time frame. Right here there is no breakout triggered but you could use another strategy to trade that channel and find a good possible entry. Whats great about this indicator we are finding out as we go is that you can trade inside and outside the channel. So there is basically always a possible trade happening. Great comments so far guys! Looks like some of you are super pumped about this indicator!!! Keep the comments Coming we want to know what you guys think of this! This one seems to actually work! So many other vendors sell something that only makes them money. Yours is a great offer to actually help some people get better at what they love. Thanks again for at least giving us a chance to get better with your help! No problem Steve! Yes it certainly does work. That is out #1 goal with our indicators. To help people trade our strategies consistently. Thanks Sam! Our site is relatively new and yet we are getting well know throughout the trading community more and more every day because traders are tried of trading blindly and are searching for great strategies. We are glad to help these new traders out and we are excited what the future holds for helping traders conquer the Forex market! All you traders out there you have to know the Trading Strategy Team and be part of the growing family. It looks pretty straightforward and easy to use but most importantly it looks profitable and i think and indicator like this will be able to generate steady profits for even novice traders like me. Yes David it certainly can be profitable for any trader, especially one that is new to the market. Thanks for your comment! Hey Collin! Yes I agree that sometimes 50 pips is just not possible as the strategy has a default which is why we made sure there is a setting where you can adjust it to your desired pips. Thanks for you comment! This is a great indicator to use as a trend confirmation tool that minimizes risks for consistence profits. Thanks! Great analysis on your part. yes the strategy works with any market! Thanks Josh, glad you have found success from our trading strategies! The great thing about CTI indicator is even a newbie can use it like a pro.CTI indicator is great success for channel trading. Yes, this certainly is a step over any other channel indicators that we have found on the market. Good comment thanks for sharing! Any indicator that serves as eyes and rules-follower across multiple pairs is gold in the bank, confidence in the future, and maybe even vacation of my dreams. Thanks for creating such a tool. No Problem Mary, we hope that we can get you there because we think everyone deserves a chance to go on a vacation of their dreams! The channel trading strategy is great, it helps my trading given its simplicity. Although I have never used a proprietory indicator before, i believe i will be lack to have and use CTI for long time, LONG WINS, LONG GOOD LIFE. Yes, 50 pips is a great target on higher time frames that the strategy teaches you. Thanks for the comment. Your entered 🙂 Good luck! Well our is to help you conquer that and start trading profitably! We will continue to give you guys free helpful information and strategies because every trader is different after all. Thanks for the comment! I would definitely love to have this indicator. I have using the rabbit system for a little while and it seems to be solid. This indicator would definitely help as working full time and trying to trade is always a handful. We will try Robert! It sure will! I think this strategy best for europe and US session only, not for asia session. I just wanted to thank you for sharing your knowledge for free. Time is the most valuable thing in the world and you guys are spending it for us to help us with our trading journey. So, no amount of thank yous can replace your time and it is the least I could do.
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