Placing Channels on Stock Index Charts on the MetaTrader 4 Platform

The third option on the insert menu on the MetaTrader 4 software is the channels button key. Channels button is used to insert various types of channels on Stock Indices Trading charts in MetaTrader 4 software. The channels button is pictured below.

Menu Button for Placing Various Channel Tools on the MetaTrader 4 Platform

The channels that can be placed on charts are shown on the channels button key menu are:

1. Stock Indices Trading Fibonacci Channels
2. Linear Regression Channels
3. Equidistant Channels
4. Standard Deviation Channels

All these channels have different analysis & are drawn differently on the MT4 Indices charts.

Stock Indices Trading Fibo Channels

Fibo Channels is a type of channel that is automatically drawn by this Fibonacci Channels button key, To draw these Fibonacci channels, a trader selects two points where to draw the same way a trend line is drawn on the MT4 platform, once this trend points are joined, the Fib 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.

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 price boundary, this price boundary shows upper & 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 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 upwards channel or downward channel, the example illustrated below shows an upward Stock Indices Trading channel, once the lower channel is plotted ( 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 stock index price as pictured below - the next time price touches this line the buy trade will then be closed and profit taken. As pictured below this was the best price to take profit when the price in the upwards 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 price should move within. The Standard Deviation channel is portrayed & shown below.

Placing Standard Deviation Channels on MetaTrader 4