Day Trading Basics — Channeling Market Strategy

In this quick day trading lesson, I’m going to be teaching you all about the basics of what a channeling market looks like.

Once again, the text below is only a support for the video. So it won’t make much sense unless you watch it first.

There is a question that I get asked very often. What the difference is between a channel, a market, a sideways market?

Well, most people are right to be confused because it’s pretty similar. The thing that makes them different is very subtle. Basically, a channeling market has bigger movements.

Like we have here.

OK, so how do I know that this is even a channeling market? I start with marking the support and resistance areas. This means that you need to find the pivots.

So I like to look at channeling markets when they have three or more pivots that are almost within the same box (the small squares that you see in the back). This box is about one point wide for me. So this is a good measurement.

In this case, the resistance area looks very even.

Then I go and do the same thing with the bottom where I have another three pivots that almost come to the exact area.

So this example is a very typical channeling market.

As you can see a channel literally is just going from support resistance, support resistance. And your goal as a trader is to read it, to understand what is happening. I personally am not a big fan of trading within channels because you never know when the channel is going to switch directions.

Sometimes it doesn’t even hit the pivot and it decides to switch much sooner than where my entry was to stop me out because that’s the place that is now going to continue on.

So if you have any questions you can always ask me at traderchick.com and if you want to learn day trading basics — check out Day Trading Courses.

And this is what your channel market looks like.