Placing Channels on Stocks Charts on the MT4 Stock Trading Platform
The third option on the insert menu on the MT4 stock trading software is the channels button. The channels button is used to insert various types of channels on Stock charts on the MT4 stocks trading platform. The channels button is shown below.
Menu Button For Placing Various Channel Tools on The MT4 Stock Trading Platform
The channels that can be placed on the stocks trading 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 drawn differently on the MetaTrader 4 Stock charts.
Fibonacci Channels is a type of channel that is automatically drawn by this Fibonacci Channels button, To draw these Fibonacci channels, a Stock trader selects two points where to draw the same way a stock trend line is drawn on the MetaTrader 4 stocks trading platform, once this stock trend points are joined, the Fibonacci channels drawing tool uses these points to draw the first stock 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 stocks price reaches these points.
Fibonacci levels used to draw 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 MT4 Stock 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 stock price boundary, this stocks price boundary shows upper and lower stocks price boundary and the center point which is the mean for the stock 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 stocks trades. Linear regression channels are shown below:
Placing Linear Regression Lines on MT4
The equidistant channels is the most commonly used channel in stock trading. On the MT4 stocks trading platform, a stock trader can draw an upward channel or downward channel, the stocks trading example explained below shows an upward Stocks channel, once the lower channel is drawn ( stock trend line), the top channel is automatically drawn, a Stock trader can then double click the upper channel to adjust it so that it touches the highest high of stocks price as shown below - the next time stocks price touches this line the buy stock trade will then be closed and profit taken. As shown below this was the best stocks price to take profit when stocks price in the upward stock trend touched the upper channel.
Placing Equidistant Channels on MT4
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 stocks price should move within. The Standard Deviation channel is shown below.
Placing Standard Deviation Channels on MT4