How does Channel Trading work?

  1. Basic method:
  • Spot the formation of a channel as early as possible, check its fundamentals and other criteria. Gradually build up a position as the channel forms.
  • Sell some stock when the price bounces off the resistance line.
  • Buy more stock when the price bounces back from the support line.
  1. When a channel changes shape:
  • Close out the position as soon as the channel changes direction, either from upwards to downwards, or from downwards to upwards.
  • If the direction remains unchanged, but the slope becomes steeper, buy or short more stock. When the slope becomes too steep, re-check the fundamentals; it may be a good time to take most of the profit.
  • If the direction remains changed, while the slope becomes flatter, buy or sell less. When the slope becomes too flat, re-check the fundamentals, you may want to downgrade the stock from fast grower to slow grower, or just replace it.
The Earning Channel software, as well as the articles, tutorials and suggestions in the website and social media, are provided as tools and references to help users develop their own market analyses and make their own investment decisions. Users are ultimately responsible for the way in which they use this information to invest in the stock market. Nothing associated with the Earning Channel or the information presented in articles and tutorials should be interpreted as direct advice on buying or selling of securities.