Channel Forex indicators are a type of technical tools developed for the construction of the price channel. It is a region of the tracked asset price movement. Robots of this group provide a trader with signals about the most successful moments for entering the market. Below we describe the mechanism of such indicators in details.
Determination of the trend and the trend channel, is in priority for every trader working on the currency exchange. To get rid of the manual method of drawing trends on the graph and determining the channel borders "by eye", the channel indicators were invented. These instruments of technical analysis allow to delineate the range the price moves in.
There are quite a few types of price channels on the currency market - starting from the standard Bollinger bands and ending with the Keltner and Donchian channels. And of course, to support the work strategy for each channel, indicators were developed. Many trading robots of this group are built in the MT4. However, you can find a more complete indicator list on the MTD website. You can also download the channel indicators for free, and read the instructions for their integration and application, on the MTDownloads website.
Applying of the channel indicators
Channel indicators are very popular trading robots. This is due to the tactics of rebound from the built-in channel borders, regardless of the construction method. In fact, this is a miniature trading strategy, because once the price reaches the border of the channel, the trader receives a signal for the restrictive orders correct installation.
Using the channel indicators, everything happens in exactly the same way as in a manual work. At any time, a channel which the price moves in, is built on the graph, and the trader is waiting for the best moment to enter the market. Then everything depends on the strategy - either you trade on the bound from the channel border, or on its breakdown. The difference is, that in the manual method you will continuously sit at the monitor and wait until the price touches the border, and the channel indicator will give a signal automatically - and after that it will be logical to run to the computer and open a deal.
Besides this, undoubtedly a huge advantage, another advantage is that the trader can independently edit the algorithm of the indicator. After all, you can change the standard version of building a channel for 3 extremums, and use more ingenious methods. For example, you can use moving averages as the boundaries. This will significantly expand the technical analysis scope.
Replacing the standard MT4 capabilities
The use of channels is rightfully considered to be one of the simplest, and the most reliable ways of trading, and the use of relevant indicators makes it possible to forget about drawing them manually, and spend a lot of time analyzing the graph. Thanks to the channel indicators, a huge number of traders around the world choose Forex - because you can automate your work here, and still control revenue. There are some examples of the manual work replacement by automated trading robots.
Working with the Metatrader terminal, you can build 4 different types of channels: equidistant (3 extremes, this is the most common), Fibonacci channel, linear regression channel, and the standard deviation. You can use a different trading robot to build each one of these channels. A complete list of the channel indicators is on the MTD website.
For example, you can build channels right on 3 time frames, set in the algorithm settings, using the Channel indicator. On the same graph, the trader can analyze the basic price levels. This technical analysis method is considered to be an analogue of an MT4 equidistant channel, since the construction is also carried out on extremes.
The MZZ9 indicator, which can build Fibbo channels, fan and Fibonacci arcs, is multi-functional. The main advantage of such a trading robot is that, while the channel is made, several additional lines are formed, parallel to the upper and lower boundaries. This bonus is useful for the trader, because these lines are easy for navigation, when the channel breaks down.
You can learn the the indicator robots work in detail on the MTD website. There you can download channel indicators for free, and read the instructions for their integration into the trading terminal.
Indicator as an addition to the strategy
In conclusion, we want to note that even though the processes of price channels building is automated, you shouldn't rely on robots entirely. Indicators are a useful addition to the strategy, but they can't completely replace it. First of all, the strategy is based on personal skills and preferences in the trade. The trader should be able to use his own capabilities in the market analysis correctly, as well as to control the automated systems.
Before you'll start to work actively with some indicator, it is recommended to test it in different market conditions and with different trading instruments. Only after that, you can rely on the program. The use of several trading indicators will be an effective way of trading.