Placing Channels on Forex Charts on the MetaTrader 4 Platform
The third option on the insert menu on the MetaTrader 4 software is the channels button. The channels button is used to insert various types of channels on Forex charts on the MetaTrader 4 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 the currency charts are shown on the channels button menu are:
- Fibonacci Channels
- Linear Regression Channels
- Equidistant Channels
- Standard Deviation Channels
All these channels have different technical analysis and are plotted differently on the MT4 Forex charts.
Fibonacci Channels is a type of channel that is automatically drawn by this Fibonacci Channels button, To draw these Fibonacci channels, a Forex 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 Fibonacci channels drawing tool uses these points to draw the first trend line and 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 Forex Charts
Linear Regression Channels
Linear regression channels are self adjusting channels, that adjusts as the 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 and close trades and also determine the levels to take profits or set stops for currency trades. Linear regression channels are shown below:
Placing Linear Regression Lines on MetaTrader 4
The equidistant channels is the most commonly used channel in Forex trading. On the 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 Forex 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 MetaTrader 4
Standard Deviation Channels
Standard Deviation channel is similar to Linear Regression channel and it is also used to set the upper and lower boundaries within which price should move within. The Standard Deviation channel is shown below.
Placing Standard Deviation Channels on MetaTrader 4 Online Forex Trading Platform