Placing Channels on Forex Charts on the MetaTrader 4 Platform
The third option on the insert menu on the MT4 platform is the channels button. The channels button is used to insert various types of channels on Forex charts on MT4 platform. The channels button is shown below.
Menu Button for Placing Various Channel Tools on the MetaTrader 4 Platform
The channels that can be placed on currency charts are shown on the channels button menu are:
- FX Trading Fibonacci Channels
- Linear Regression Channels
- Equidistant Channels
- Standard Deviation Channels
All these channels have different technical analysis & are plotted differently on the MT4 Forex charts.
FX Trading Fibonacci Channels
Fibo Channels is a type of channel that's automatically drawn by this Fibo Channels button key, To draw these Fib channels, a trader selects 2 points where to draw the same way a trend line is drawn on the MT4 platform, once this trend points are joined, the Fibonacci channels drawing tool uses these points to draw the first trend line & then automatically draws another 5 lines that form channels - these channels are used as profit taking levels to book profits once the price reaches these points.
Fibonacci levels used to plot these channels are: 0.618, 1.000, 1.618, 2.618, 4.236: The most commonly used channels are the first two channels as shown below:
Placing Fibonacci Channels on MetaTrader 4 Charts
Linear Regression Channels
Linear regression channels are self-adjusting channels, that adjusts as channel is drawn from point 1 to point 2, the linear regression channels then form what is similar to a price boundary, this price boundary shows upper and lower price boundary and the center point which is the mean for the price.
These upper and lower channels are used to open trades & close trades and also determine the levels to take profits or set stops for currency trades. Linear regression channels are illustrated below:
Placing Linear Regression Lines on MT4
Equidistant Channels
The equidistant channels is the most oftenly used channel in Forex trading. On MetaTrader 4 platform, a trader can draw an upward channel or downward channel, the example below shows an upward Forex channel, once the lower channel is drawn (trend line), the top channel is automatically plotted, a trader can then double click the upper channel to adjust it so that it touches the highest high of price as shown below - the next time price touches this line the buy trade will then be closed and profit taken. As shown below this was the best price to take profit when price in the upward trend touched the upper channel.
Placing Equidistant Channels on MT4
Standard Deviation Channels
Standard Deviation channel is similar to Linear Regression channel and it is also used to set the upper & lower boundaries within which price should move within. The Standard Deviation channel is displayed and shown below.
Placing Standard Deviation Channels on MetaTrader 4 Online Forex Software
