Trend Channel

1. PURPOSE

Prices moves in a period of Contraction and Expansion. Contraction means trading range. Once a range develops, prices tend to trade inside the boundaries. A move beyond these boundaries may give us a trending move. We have developed this strategy to catch those moves.

2. INPUTS

We only have one input for this strategy.

Enter Price Channels Period: Default value is 11 for this input. It means trade will come when price breaks either above 11 bars high or below 11 bars low.

3. HOW TO INTERPRET

Channels are lines set above and below the price of a security. The upper channel is set at the x-period high and the lower channel is set at the x-period low. Channels can be used to identify upward thrusts that signal the start of an uptrend or downward plunges that signal the start of a downtrend. Price Channels can be used to identify strong moves that may result in lasting trend reversals.

Securities that continuously exceed the upper channel line show strength. Conversely, securities that continuously break the lower channel line show weakness.

We have an inbuilt trailing stop and target in this strategy which helps us to manage the risk.

4. OUTPUT

It’s a complete trading strategy which covers the every aspect of trading. When you apply this strategy you will see two red lines on the chart.

Red line above the price bars are trailing stop for short positions.

Red line below the price bars are trailing stop for long positions.

The position weather it’s long or short will continue until price touches the respective trailing stop line.

A green arrow (below the price bar) means a long position is taken here.

Red colour ZERO (0) below the price bar means the long position have closed here.

A red arrow (above the price bar) means a short position is taken here.

Green colour ZERO (0) above the price bar means the short position have closed here.