Greetings friends and readers. Today I want to share a very interesting strategy called - Moving Channels.
A bit of history... This strategy was used back in 2002 in the Forex market.
It has been noted that some currency pairs move very clearly within price channels. And since in Forex you can freely open both down and up, it was very convenient to catch price peaks.
Since crypto on Binance is also a kind of currency, some pairs also move in the same channels and work out price ranges very well...
What is the strategy about? And why is it needed at all?
It is often difficult to open a trade because you are not sure if you are opening at the very bottom, what if the price goes lower? So, price channels help to determine landmarks for where to open and where to close a trade.
Moving channels are built very simply, you choose a time frame of 1 hour or 4 hours, depending on what is more convenient for you to trade and based on the coin. A trend line is drawn through two minima, and between these minima, a maximum is sought, and another line is drawn parallel to the first.
On Binance, there is a separate tool for this.
Trading rules:
If the price reaches the lower boundary of the channel, open a buy order.
If the price reaches the upper boundary, those trading on the spot can either close the trade or, if the movement is very strong and fast, wait a bit longer and set a stop loss closer to the upper boundary.
If you know how to work with futures, you can open a trade down at the upper boundary. Then the potential profit will be greater.
If a new maximum or minimum is formed, the price channel is rebuilt, and orders are moved to new boundaries. If you are already in a trade, you can wait for the price to reach the new boundary.
If the price goes beyond the channel boundary and covers a certain distance, it has been noted that the price will likely cover approximately the same distance again. In Forex, this was about 60 points for the dollar/ruble pair.
In this case, a double stop loss was set with a target of 60 points.
For crypto, these parameters need to be adjusted individually for each pair.
Do not trade inside the channel. If you haven't entered at the boundary, wait for either a channel change or when the price approaches the boundary again.
As an option, you can partially close positions when the price hovers near the boundary and does not reach it by 5-10%.
Head and Shoulders cancels all signals. - If this figure appears on the chart, I trade according to it. See links below...
Orders can be placed not right at the channel boundary but a bit higher or lower. This parameter is selected by running statistics on historical data. You simply take a 1-hour or 4-hour chart, print it out, glue it together, build channels, and calculate statistics. If the result satisfies you, you start trading; if not, you change the parameters and recalculate.
Example below:
Here is a 4-hour chart, but I trade on 15-minute and 1-hour charts as well, so there are many trades and there are intermediate channels. A channel is drawn through points 123, and we see how clearly the price bounces at point 4 and reverses. At point 4, there should be a buy order. And at point 5, a sell order.
The result of such a deal is $110 - $88 = $22 from an invested $100. Quite a good result over 15 days. But if you are interested in trading more actively, you can find coins that move well within a 15-minute or 1-hour range. There will be more trades, but you will also need to monitor them more frequently.
Those who have not used this strategy before, especially beginners, I do not urge you to open positions with your entire capital. Observe, see how the price moves. Build your channels, check everything historically. Calculate the statistics...
Share in the comments how it went for you or what didn't work.
Happy New Year to everyone!! Wishing you success and patience!
continuation here:
Strategy of Moving Channels. Part 2
Continuation of the series of articles from the Speculator (Spekulyant Anle):
Graphic Analysis. Trading Classics. Part 1
Graphic Analysis. Head and Shoulders. Trading Classics. Part 2
Where to invest 1000? Or several high-yield coins. Part 1
Where to invest 1000? Part 2... or high-yield coins
A new Head and Shoulders pattern is forming!
Head and Shoulders - the perfect reversal...
