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