Placing Channels on Stock Indices Charts on the MT4 Platform
The third option on the insert menu on the MT4 software is the channels button. The channels button is used to insert various types of channels on Indices charts in MetaTrader 4 platform. The channels button is shown below.
Menu Button Key for Placing Various Channel Tools in MetaTrader 4 Platform
The channels that can be placed on charts are shown on the channels button menu are:
- 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'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 indices trend line is drawn on the MetaTrader 4 platform, once this indices trend points are joined, the Fibonacci channels drawing tool uses these points to draw the first 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 price reaches these points.
Fibo areas used to plot these channels are: 0.618, 1.000, 1.618, 2.618, 4.236: The most oftenly used channels are first 2 channels as illustrated and shown below:
Placing Fibonacci Channels on MT4 Indices 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 & close trades and also determine the levels to take profits or set stops for stock indices trades. Linear regression channels are illustrated below:
Placing Linear Regression Lines in MetaTrader 4
Equidistant Channels
The equidistant channels is the most oftenly used channel in indices trading. On MT4 platform, a trader can draw an upward channel or downward channel, the stock indices trading example explained and illustrated below shows an upward Indices channel, once the lower channel is drawn ( 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 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 in MetaTrader 4
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 stock indices trading price should move within. Standard Deviations channel is displayed & shown below.
Placing Standard Deviations Channels in MetaTrader 4
