On lesson 5, I have talked about
the basic of swing trading and when to buy/sell base of support/resistance
levels. On this lesson, I am going to go over the same principle of “buy the
dips, sell the rips” but this one will be applied on channel up chart patterns
which I think would be the easiest for beginners.
So what’s a channel in stocks? In
my definition, when a stock is trading in the same range and don’t breakout of
that range for a certain period of time. Below is an example of a stock traded
in down channel and broke out of it.
So the channel up charts are just
the opposite of that. This is one of the easiest patterns to swing trade with
because a channel up pattern indicates a bullish sign. When we try to swing
trade this pattern, first, we need to identify the channel with trend line.
Second, we need to find the one that has been channeling for quite a while to
make sure that it is going to follow its trend. Third, we buy on the lower
channel and sell on the upper channel. Forth, we cut loss quickly when the down
channel is clearly broken. PS. I recommend that you buy only half a size that
you wanted to own, and then buy another half when it is clear that your stock
is trading up and away from lower channel line. Below are some of the examples.
Enjoy!
There you have it. Channel up
chart pattern and how to swing trade them. There are no right or wrong when you
draw a channel, because different time frame will result in different channels
but the longer time frame the better. So go find some channel up charts, put them on your
watch list and start making $$$. See you in chat tomorrow…. Cheers!
