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How to determine your Forex channel trading stop and target price-levels for the best Forex results
hi everybody and explore from expert Forex I hope you enjoyed today's forex trading video in this lecture we're going to address the question where do I put bus stops and my target swing channel trading unfortunately is not only one answer for that particular question so I'm going to present you with a number of alternatives and you can decide which alternative suits you based on your level of trading expertise and confidence so let's have a look at a general guideline with put your stops and targets first general guideline is based on a calculation so let's have a look out this one works let's look at the chart there is a particular trade that's just been activated it's bounced on the top of the channel it's and we're going to be trading it in the direction of the trend so a pretty good entry it has bounced a number of times and we now need to decide where to put our stops on target so the first one is to calculate the width of the channel now the channel size cut is very easy to calculate you calculate the size of the channel not up vertically but but based on square corners as you can see I'm doing on the screen so this channel appears to be around about 160 that's wide so that's the width of the channel and years where the calculation comes in you would go for 80% of the channel width so 80% of a hundred and sixty is roughly a hundred and fifty foot so you would then put your target at a hundred and thirty person let's see what happens if I do that 130 pips and that's actually a very good target because it's it's before the previous low so that is actually a good place to put your target so you put your target and a hundred and thirty round about where I have it there let's market and then your stop would be 40% of the channel width or 40% of 160 is 64 so you would put your you'll stop 64 puffs above the entry that you've had so we just do that and it would be more or less in this particular area so again our market for it for you okay so your stop would be there your target would be there on that particular strain son section using the general guide the general guide is use 80% of the channel width for your target and use 40% of the channel width for your stop so when in doubt apply the general guide now let's have a look at a channel trading based method of determining stops and targets so the idea of channel trading is actually to catch 100% of the move so if the price was to bounce on that channel line that we looking at right now it will come it's expected to come down to the lower channel line so our target can now move right down here and we can put our target round about the area with the lower channel line is now that improves our targets tremendously if you look at this and this is 200 plus a 200 per potential move here so that's the alternative target that you can set for this particular trade and if you sitting this kind of target you can also then set your stop and the channel width the channel width would be and you could do this visually you would probably put your set your stop roundabout there remember remember the pricing guy goes straight up or straight down so it will take a while to reach your target and you'll stop so your stop would be more or less Li which is also quite a big stop it's 150 pips that's fine so you have 150 per stock and a 250 target and that is fine so that's the alternative method which is a visual method so you would visually see how the price should go down there if the price breaks out it could go over there now the beauty of channel trading is that often when there's a breakout it comes and retest the breakout point so it is unlikely that they'll reach the full stop you have to watch it and if it does come out and retest the breakout point you can then get out at a very small stop okay so that's the second method we could call this the alternative method and then there are variations on the two methods that I've just shown use for instance the alternative method instead of going for hundred percent of the move you could go for 80 percent of the move and that would that would be a bit more conservative and your stop could be 80 percent of of what we calculated before so you could turn it into a slightly more conservative way the other way which is a third way or fourth way of putting your stops and targeting is to look at the support and resistance that actually exists on the chart so for instance I have drawn in some support and resistance lines on the chart the little green or the thin green lines and you could then say okay if I'm going to trade down to this level I'm going to put my stop just above the previous support and resistance level so you could actually go with a very small stop your stop could be over there for instance and your target could be either down here or or over here and it still would be a fantastic risk-return ratio so you could use support and resistance to determine your target areas this what this particular trade would be a very good high probability trade if you very consider if you'd put your stop behind the the next level of support and resistance that would create a very big stock and but if you keep your target where it will be it's expected to be it could still be a good trade when determining your stopping times use your trading logic you could use the general guideline which is a calculation or you could use support or resistance based on what is happening on the chart right now and that's the method that I like using I like using the current support resistance levels to determine that now the same logic applies to break out the trades so I'm not going to repeat the formulas but you use exactly the same logic on break out trades remember it when there's a break out the breaker is likely to move the width of the channel so there's the guideline to where you expect the break are to move too and you can use the same logic those three guidelines that I've just mentioned you can use for breakout tracks I hope that helped you there is no perfect answer you have to determine what reach your needs best and and what your experience teaches you so let's move on into the next lecture thanks for watching this video you can find links and more information about the video in the description if you found it interesting please like it and share it with your friends also remember to subscribe to our channel so that you don't miss any future forex trading videos so for me Alex to play cheerio
