This Channel Trading Strategy can be a huge difference-maker in your trading arsenal. In this article, I am going to show you why going off on the “rabbit trail” is not such a bad thing after all! I will also show you a forex channel trading system, trend channel trading strategy, fx analysis, and much more in this article. Also, read about the Trail stop-loss in Forex.
This strategy is all about taking advantage of the price movement that is moving away from normal price action.
When I say the “norm” I am referring to what we call a channel. We want to escape this channel and enter on our rabbit trail to pip glory! Here is another strategy called The PPG Forex Trading Strategy.
Fantastic! Now let’s look at some of the basic information we need to get started...
Our Most Advanced Channel Trading Indicator!
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What is Channel Trading and Why Is It Important for This Strategy?
A channel is simply a price movement that uses support and resistance in the past to validate what it will do in the future. The price movement will hit these points (resistance or support) and “bounce” back into the channel.
Kind of like skid marks on a road...
It goes back and forth but never exits the area.
This type of movement creates a price channel on the charts.
Now since we know what a channel looks like let’s look at the different types for this forex channel trading strategy.
There Are Three Different Types of Channels:
Ascending Channel
Descending Channel
Horizontal Channel
There needs to be at least two support and resistance levels to validate a channel!
The support and resistance points are marked in the pictures above.
You can see in the three examples above that they all have at least 2 levels of each.
When constructing these channels, ALWAYS remember that both lines need to be parallel to each other. Do not force trend lines to look like a channel. If they aren’t parallel then it is clearly not a channel that formed.
Helpful information: If you are completely new to this type of trading dive into some charts and do some channel work. Simply go back in time on the charts and draw yourself some channels. If they match what you see above, perfect! Keep doing them! Once you did about 100 of these it should be fresh on your mind and you will be ready to master a trading strategy that mainly focuses on these channels.
So now since you are the master of channels let’s look at what this strategy is all about...
Rule #1: This Channel Trading Strategy Requires You To Draw a channel on a 4 hour or 1-hour chart.
The first thing you need to do to get this strategy started off is you need to find a channel on a four hour or one hour chart. Remember there must be two resistance and support points to validate a channel.
This strategy can use many currency pairs. Make sure you search through all of them. Do not get caught up in only trading one currency pair. Many say that they “only trade EURUSD.” Why limit yourself to just one pair? Get in the charts and see for yourself! There are channels everywhere. This strategy will work with any currency pair. The opportunities are endless...
Sorry for that rabbit trail, let’s get back to this strategy!
So below is a prime example of a horizontal channel. This is AUDNZD chart taken on a 60-minute time frame.
Not too bad. So basically all you are doing here is drawing parallel lines.
I added the color where the channel is highlighted. Just as long as both of your lines are parallel to each other.
Rule #2 Identify If there is a Breakout of a channel on a 1-hour chart.
The way you find the trade is to find a breakout of the channel. In a perfect world, the support and resistance levels will hold on forever.
But the world isn’t perfect.
So that’s why we have what is called a breakout.
Below the breakout candle is marked. This was taken on a one hour chart. In this strategy, we will use the one hour chart to find a breakout. Here is an example of a master candle setup.
This breakout happened on the top of the channel. So that means you will BUY.
If the breakout happens on the bottom of the channel then you will SELL.
Great! We have breakout candle let’s get in the trade and follow the rabbit trail to pip glory!
Not so fast..
Rule #3 Wait for a Pull Back on a 15-Minute Chart.
Why wait? Because the market is a money-grabbing machine, and they want your hard-earned cash!
You wait because sometimes the market does a “head fake” and turns against you.
Look at the example below for proof of this.
So if you would have got in this trade right when it broke out of the channel you would soon have got stopped out.
That is why it is so important to Wait for it to pull back.
So back to our original example, you see below the pullback we are talking about.
This is where many people struggle. They see that it broke out so they want to click BUY or SELL right now!!
Think about the sayings you have heard since you were a child, “Patience is a Virtue,” Or “Good things in life take Time”
Just be patient and wait…
This trade would not have burned you, but countless other trades would have!
Our Most Advanced Channel Trading Indicator we call the CTI Indicator. Available on the Meta Trader 4, Meta Trader 5, Ninja Trader 7, and Ninja Trader 8 Platform!
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Rule #4 After Pull Back, Make Entry.
We are getting so close to getting on our rabbit trail to make some serious pips!
Our lines are drawn, we identified the breakout and waited for the pullback. It is now time to make our trade.
The criteria to make an entry after a pullback on a 15-minute chart to enter a trade is that there must be two 15-minute candles that support our trade.
If it is a BUY trade we want to see TWO bullish (up) candles after the pullback.
If it is a SELL trade we want to see TWO bearish (down) candles after the pullback.
In our example we are using we would need to see two green bullish candles after a pullback to enter a trade.
Below is where we would enter.
Enter after the two bullish 15-minute candlesticks close.
You may be thinking oh no! The trade went the wrong way, get out now!
We are not worried about that because our strategy told us that the breakout occurred and we are moving up!
Rule #5 Stop Loss Placement
This is probably one of the most important rules of the strategy.
You always need to place a stop loss somewhere for a reason. If you are throwing in stop losses 5 to 10 pips from your entry order just because someone told you to do it, then you are without a doubt treading some dangerous waters.
In a Buy The stop loss will be placed in the channel below the last support point.
In a SELL The stop loss will be placed in the channel above the last resistance point.
In our example, you can see where the stop loss was placed.
That way if it does come back in the Channel it will hit the support level and end up going back up in a bullish movement.
Rule #6 Ride The Rabbit Trail to 50 pips using this Channel Trading Strategy!
The last thing you need to do is know when to exit.
This strategy goes for a 50 pip target.
The rabbit trail could take 2 hours, or it could take as long as two days.
Stay in the trade and remember your rules. You are going for a 50 pip breakout trade!
So to recap, here is what needs to happen in order for you to enter a trade:
Rule #1: - Draw a channel on a 1 hour chart.
Rule #2 - Identify If there is a Breakout on 4 hour or 1 hour chart.
Rule #3 - Wait for a Pull Back on a 15 minute Chart.
Rule #4 - After Pull Back, Make Entry.
Rule #5 - Find a Stop Loss Placement.
Rule #6 - Ride The Rabbit Trail to 50 pips!
Hope you find great success with this strategy. Always remember to only be risking no more than 2% of your account at a time. If you have any feedback about this strategy please leave us a comment or you can reach us at info@tradingstrategyguides.com
To Learn Another strategy, check out the trend following strategy article here.
Thank you for reading!
Please leave a comment below if you have any questions about Rabbit Trail Channel Strategy!
Also, please give this strategy a 5 star if you enjoyed it!
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Really easy to follow steps there!
Glad to assist! We hope this helps you and your trading success!
Very well explain in simple words and charts, However Entry not very clearly understood, further Risk Reward seems not matching.
Thanks! Your entry is to be placed after a pull back on a 15 minute chart. The stop is placed below the last support or resistance (depending if it is a buy or sell) in the channel. The goal is 50 pips so risk reward will vary depending on where your stop is placed in the channel.
Rabbit Trail is simple, time-tested and trust-worthy stretagy.
Thank you very much.. no doubt. it's really valuable strategy.
Warm regards.
Ashraf
You are very welcome! We hope you will find great success using this strategy!
Thanks! it looks very nice.
Did you try a backtest or reel trades during a time long enough like100 trades for instance?
If you have done that, what are the results: number of win trades: how many pips ?
number of losses and how many pips ?
Thank you again
Roland
Awesome question! We would love for you to go ahead and try it yourself and post your results on here after you have back tested 100 trades or so. It would be great to see a dedicated trader take the time to see if they are willing to use a strategy before they go live. We look forward hearing from you and can't wait to see your results if you are willing to do that. Thanks!
Thanks for very clearly explaining the strategy
No problem! Glad to help.
Wow guys everytime i see the name J Crawford or Trading Strategy i know im in for a trading tips treat!!You guys are awesome..Ive learnt how to use the Ichimoku and some good scalping strategies eg LazyRiver..Soon i will be equipped enough to venture into trading!Thanks a lot and please keep up the good work..
Great to hear! We love hearing your guys feedback. Keep studying and use that demo account to your advantage! Have a great day!
Thanks for the strategy! Just for clarity do I make the entry on the 15min chart or on 1 hour chart where I identified the breakout. Can the strategy be utilised by swing traders too??
Yes this strategy uses the 15 minute chart to identify the break and go if you want to call it that. So once you see a pull back candle that closed on a 15 minute chart, you wait for two 15-min. candles to close then you make your entry. So the example I used you had to wait for two bullish (green) candles to close on a 15 minute chart in order to make the entry. Hope this helps!
you lost me after the break out non trade.
please check out our previous comment for clarification. If you need any more help with this strategy you can always reach us at info@tradingstrategyguides.com Thanks!
[…] be found on any trading instrument on any time frame. Our focus will be on Forex currency pairs, but price channels can be also found on Equities, Futures, Commodities and other trading instruments. Having said […]
Thank you for the information. These strategies can be built upon and reconfigured (fine tuned).
Looks great. I was just studying channel trading, and this may really come in handy.
Thanks,
Norm
Thanks for the comment! Channel trading is super simple with this indicator! In Fact, here is a nice current EURUSD Channel drawn by the CTI. Pretty Cool Right? https://uploads.disquscdn.com/images/8a2be60629f4def4681a3644988a21fce95df9274ca85120677da7ddf6a5681c.png
This is a great strategy! Thanks a lot!
No problem, one of our best 🙂
It would be great to have the CTI Trading Tool indicator that would trade the Rabbit Trail Strategy!
Great, like this: https://uploads.disquscdn.com/images/129efcac40c9222f5d89632b6439ac05ef01def45e8ad27bc73d1cf92e5d3f94.png
Does this strategy work in all markets like or only Forex????
Hey Girish! Thanks for the question. This strategy will work in all markets on any time frame. We recommend on lower time frames lowering your target area to 20-30 pips instead of 50. With that small tweak the results are great for those scalpers out there who want to use this strategy.
What interest do you have in an indicator that would help you trade the Rabbit Trail Strategy consistently? The CTI Indicator that we developed and giving one of these away to a lucky trader In this comment section will do that for you! Comment away, we would love to hear from you! https://uploads.disquscdn.com/images/4b246532745dee7aab4423504f3f93d60805466aa10521ffbacf61862e1c1bb8.png
COMMENT BELOW TO ENTER.... GOOD LUCK!
Very good indicator, and best way to trade support and resistance
It would be great to have the CTI Trading Tool indicator that would trade the Rabbit Trail Strategy!
Great! We hope you like it when we launch this indicator out to the general public!
The indicator would make short work of trying to identify these channels. Would look forward to that!
Sure thing! Most Traders are not graphic designers or artists so why should we have to constantly be drawing these channels 🙂
CTI makes it completely effortless since it will draw them for you on every time frame.
Thank you for this trading strategy--extremely well explained. i wonder if you would mention how you stalk a possible channel trade, please??... when you find a promising channel-- perhaps it is a 1 hour chart-- do you view it every hour? this is where i dont do well is stalking the setups... and it is one of the reasons why i am not a successful trader... I believe that if it made a number
of successful trades in a row, i might be more attentive-- however the setup can go on for days...and i get distracted and never see the entry.... do you have a more successful/intelligent approach to stalking a breakout---well, other than your helpful EA-- naturally--
Sure... so what the CTI does is draws the channel on multiple time frames like this: https://uploads.disquscdn.com/images/d01538fe2e1d9ac341cf82f3cdb9bd3fe60f53470dff35707991ccb92706f787.png
This is a H1 and a M30 TIme chart. Once you see that the CTI triggered a breakout out, you simply analyze the trade and make a trading decision based on what the indicator showed you.
Right here there is no breakout triggered but you could use another strategy to trade that channel and find a good possible entry. Whats great about this indicator we are finding out as we go is that you can trade inside and outside the channel. So there is basically always a possible trade happening.
Thanks for continuing to share these useful strategies, I am interested in any indicator that is not commonly available and allows me as trader to get a slightly different perspective on market activity, than the majority of traders using commonly available approaches. A channel trading indicator variation as described sounds like a great tool to have, thanks David
This indicator is truly one-of-a-kind. Its been setting up very powerful breakout channels. This is a trade one of our team members just took using this powerful indicator... https://uploads.disquscdn.com/images/d8be4bda5358383c208972e14562d1fac687c9b12b06484bacb6e7635092f809.png
Nailed it!
Looks like another possible entry here as well on this EURUSD H1 Time Frame.
Great comments so far guys! Looks like some of you are super pumped about this indicator!!!
https://uploads.disquscdn.com/images/f754a0cd49c15acf2bca4fc93399c95244563fb588863ee708bc3feee03050c6.gif
Keep the comments Coming we want to know what you guys think of this!
-Ben
This looks like a very straight forward method. It is probably simple enough for even a fool such as I
Your are right about one thing this is a very straight forward method to trading the market. However, we do not agree about the fool part :).... Thanks for the comment Joy, you are entered in the competition
Happy trading!
-Ben
Thanx
No problem Clay!
seems like a great support and resistance indicator i would love to have
It sure is.... Well good luck because you are now entered in this competition to get one of these for Free 🙂
This one seems to actually work! So many other vendors sell something that only makes them money. Yours is a great offer to actually help some people get better at what they love. Thanks again for at least giving us a chance to get better with your help!
No problem Steve! Yes it certainly does work. That is out #1 goal with our indicators. To help people trade our strategies consistently.
Wish I had found this site years ago instead of spending so much time trying the same old crap as everyone else and losing money. Thanks for all the hard work you guys do 🙂
Thanks Sam! Our site is relatively new and yet we are getting well know throughout the trading community more and more every day because traders are tried of trading blindly and are searching for great strategies. We are glad to help these new traders out and we are excited what the future holds for helping traders conquer the Forex market!
This is one indicator that I would like to add to my other indicators like the EFC; they just take trading to a whole new level.
All you traders out there you have to know the Trading Strategy Team and be part of the growing family.
Thanks Trading Strategy Guides for helping struggling traders indeed. Your teachings, strategies and all indicators that I have purchased just work indeed
You guys are the greatest trade ever...... : ))
MIke! Thank you so much..... Glad you are loving the EFC Indicator. Its a completely different strategy then the Rabbit Trail and yet just as powerful! If any of you are curious as to what Indicator the EFC is, here is a current set up I am looking at on my charts: https://uploads.disquscdn.com/images/a993ed063bc043c5912dafd637b8e06174190c3e1bc38b8f65540fa0e7217ef9.png
Hope I win the CTI indicator am your best client lol : ))
It looks pretty straightforward and easy to use but most importantly it looks profitable and i think and indicator like this will be able to generate steady profits for even novice traders like me.
Yes David it certainly can be profitable for any trader, especially one that is new to the market. Thanks for your comment!
Thanks for the CTI I positive that it was the missing link to my trading. I'm not new to the Rabbit trail strategy when you first introduced it some couple of months ago I started using it because it was very easy for me to understand and was my first time to trade with channels. I tried to get 50 pips this proved difficult .I teaked it to lower times frames my pips improved to about 25 pips plus this was a big step to as I never used to get those pips before. So now with this CTI indicators is even easier to identify pull backs as I use support and resistance. Can't to have my own copy thanks to my mentor Casey Stubbs and his team well done for making me get some profit from trading.
Once again thanks
Collin Gonye
Hey Collin! Yes I agree that sometimes 50 pips is just not possible as the strategy has a default which is why we made sure there is a setting where you can adjust it to your desired pips. Thanks for you comment!
This indicator is coming at the right time. I enjoy trading breakouts, but the problem I have is how to draw the valid trend lines. With this indicator on hand, I am sure I will be able to identify support and resistance zones with at least 95% accuracy. You guys are really doing a great job at http://www.tradingstrategyguides.com. All your free stuffs are great and unique and are not available free on other sites. Keep up the goooooooood job!
Thank you so much! We enjoy providing one new (FREE) trading strategy every week and giving it to you guys because we know it is helping! We are constantly hearing feedback from you about how the "Big Three Strategy" or the "Cypher Patters Straegy" has helped you understand a new concept about trading. Thanks for the comment and we hope this indicator will be extremely powerful for you as a trader.
Well done guys! This is truly amazing what you guys are doing. This indicator will save time, remove doubts and certainly allow me to be more specific with the strategy.. JR
Thanks Julian, we do appreciate it. It saves hours of time! No more drawing trend lines/channels on your charts 🙂
Hi yes I liked the Bunny channel discussion and l am thinking that your secret .till now .. indicator will be step above that ... and as much as l like you guys if it will help me to not have to keep buying new indicators that will be step forward for me...thanks for the opportunity
No problem Allan! The Bunny/ Rabbit/ Channel/ Strategy certainly is one to have in your trading arsenal 🙂
This is a great indicator to use as a trend confirmation tool that minimizes risks for consistence profits.
Thanks! Great analysis on your part.
Trading could be so easy 🙂 thx guys
Thats is looking awsome
No Problem Rafael! Thanks for the comment
cute strategy on a platter.thanks and hope wud work in stocks/futures as well?
yes the strategy works with any market!
I've been trading channels for a while. I love this site and have gotten some winning strategies here. Please keep up the good work! We love what you are doing!
Thanks Josh, glad you have found success from our trading strategies!
The great thing about CTI indicator is even a newbie can use it like a pro.CTI indicator is great success for channel trading.
Yes, this certainly is a step over any other channel indicators that we have found on the market. Good comment thanks for sharing!
Any indicator that serves as eyes and rules-follower across multiple pairs is gold in the bank, confidence in the future, and maybe even vacation of my dreams. Thanks for creating such a tool.
No Problem Mary, we hope that we can get you there because we think everyone deserves a chance to go on a vacation of their dreams!
this strategy is very easy with good profit, just stick to this clear algorithm and use this amazing indicator
Thanks for the comment Datka! Sure is a great indicator. We cannot wait to see what some of you think... It has huge potential!
The channel trading strategy is great, it helps my trading given its simplicity. Although I have never used a proprietory indicator before, i believe i will be lack to have and use CTI for long time, LONG WINS, LONG GOOD LIFE.
Yes, 50 pips is a great target on higher time frames that the strategy teaches you. Thanks for the comment.
I need it!!
Your entered 🙂 Good luck!
It will be great to get this free as I have been losing allmy investmentseverytime I invest to trade
Well our is to help you conquer that and start trading profitably!
Hello Guys.
Thanks for all the effort you are putting into the sending of the newsletters and thank you for all the support. I got many useful material from you.
Of course I would love to have the CTI indicator and the system.
Best regards,
Gihon
We will continue to give you guys free helpful information and strategies because every trader is different after all. Thanks for the comment!
I would definitely love to have this indicator. I have using the rabbit system for a little while and it seems to be solid. This indicator would definitely help as working full time and trying to trade is always a handful.
Thanks and keep up the awesome job
We will try Robert! It sure will!
So many comments just because most of you want to get a system for free. Greedy people,greedy as fk...
Hi Jay, Thanks for your comment as well. So guess what, you are also entered in! Have a great day and enjoy your weekend
I think this strategy best for europe and US session only, not for asia session.
Hi guys,
I just wanted to thank you for sharing your knowledge for free. Time is the most valuable thing in the world and you guys are spending it for us to help us with our trading journey. So, no amount of thank yous can replace your time and it is the least I could do.
great learning
Thanks
I had been a member of Trading Strategy Guides for some time now and having been trading for quite some time I can filter out which or who is talking garbage out there, as we all know in the trading industry not just forex there is a lot of scammers and dishonesty and who knows what else; having said that I honestly and truly believe that the Trading Strategy Team is one of the few "LEGIT" out there, I had read all their articles, read the strategies that they teach and even bought some of their systems or indicators like the EFC which works well for me indeed.
For all those traders out there especially the newbies who desire information you have got to know the Trading Strategy Team and what they teach; read their stuff and try their indicators etc; it will save you Time, Money and Effort bouncing around looking for strategies that work and save yourself the headache and frustration especially.
So once again save yourself from "Trading Destruction", become a member try their stuff or whatever you choose to do, it will honestly be one of the "Greatest Trade" you'll ever make.
Montreal Mike : ))
Don't know of any other trading education business that constantly gives away so much for free and I particularly like the simplicity used to explain every strategy accompanied by the pics. I hope the same can be said of the CTI. Can't buy anything now but looking forward to read the reviews.
This channel strategy makes sense and easy to implement. Hopefully the CTI Trading indicator will be a great compliment. Thank you for sharing!