Placing Channels on Stock Charts in Meta Trader 5 Software

The third option on the insert menu on the MetaTrader 5 platform is the channels button key. Channels button key is used to insert various types of channels on charts in MT5 platform. The channels button is shown below.

Menu Button For Placing Various Channel Tools on The MetaTrader 5 Software

Channels which can be placed on the charts are shown on the channels button key menu are:

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

All these channels have different technical analysis and are drawn differently on the MT5 charts.

Stock Fibonacci Channels

Fibo Channels is a type of channel that is automatically drawn by this Fibonacci Channels button, To draw these Fibonacci channels, a trader selects two points where to draw the same way a trend line is drawn on the MT5 Platform, once this trend points are joined, the Fibo 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 levels 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 below:

Placing Fibonacci Channels on MT5 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's 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 trades. Linear regression channels are illustrated below:

Placing Linear Regression Lines on Meta Trader 5

Equidistant Channels

The equidistant channels is the most commonly used channel in stock trading. On MetaTrader 5 platform, one can draw an up-ward channel or downwards channel, the example illustrated and explained below displays an upward Stock channel, once the lower channel is plotted ( trend line), the top channel is automatically plotted, one 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 & profit taken. As shown below this was the best price to take profit when the price in the up-ward trend touched the upper channel.

Placing Equidistant Channels on Meta Trader 5

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 displayed & shown below.

Placing Standard Deviation Channels on Meta Trader 5