Forums > Main > response to: A simple price action approach, for beginers

 Jun 14th, 2011, 03:07 PM #1 traitor786     Join Date: Jan 2011 Location: montreal Posts: 803 I have been reading A simple price action report started by metal. It is a great thread and very informative, some of us may be a bit newer and starting at page 1. Also there are some basic elements that may need to be explored a bit for a newbie. In this thread we will try to explore the basics, we will also explain terms used to increase our vocabulary. hopefully we get some of the posters on metals thread here to help out. I am not used to forums and feel if i post on that thread I may interrupt their progress with basic questions. If this thread should actually be posted with the metals thread please let me know Thank you. Quote
 Jun 14th, 2011, 03:27 PM #2 traitor786     Join Date: Jan 2011 Location: montreal Posts: 803 Expanding on what was said about making channels, I will ask a few questions about the basics of making a channel. Through out this thread we will gather up a set or rules and add to them. RULE for channels To create a down trend channel 1. 1st draw top line connecting highs 2. Then draw a bottom parallel line. For the bottom line use the *SWING LOW mid point of the top line. 3 In a down trend, we first make the bottom line and then copy (make a parallel line) to the top 4. a channel by definition is 2 parallel lines that income most of the trend. 5. Trends need to be adjusted from time to time under a set of rules Correct me if I make a mistake. ____________________________________________________ Questions. If we see that a the bottom of a downtrend is showing more lows that can be connected to form a strong trend line can we make the first line on the bottom and copy it upwards? likewise in an uptrend, can we use first make the top trend line if it is showing more consistency then the bottom? It would seem in this case the swing low is a point that is between the top trend line. Some times, it may occur that we have a few low points in that area. In that case do we put the bottom f the channel to cover all the lows in that area? What if there is a low that protrudes the bottom trend line but is not n the center? Does the term swing low always apply specifically to a big low in the center of the top trend line or is it a term used for any big low? Is it more important to be exactly in the center when identifying the swing low or is it more important to find the low around the area that makes the channel the biggest Quote
Jun 14th, 2011, 03:30 PM   #3
traitor786

Join Date: Jan 2011
Location: montreal
Posts: 803
Here is the chart he used. If any one can let me know the best way to past the chart in here that would be great.
Attached Images
 post 1 making a channel.png (91.1 KB, 307 views)
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 Jun 14th, 2011, 03:41 PM #4 traitor786     Join Date: Jan 2011 Location: montreal Posts: 803 In the second post, we see that the chart has continued. Two new lows have been added. Both these lows cross the bottom of the channel. The first new low does not open and close under under the channel. The second new low does open and close under the channel. Rule for entries to trades: 1. If there is a open and close that are under the bottom of an uptrend channel We can enter as soon as we see a close back in the channel. 2 If the open and close are not under the channel it is not a place to enter. Quote
 Jun 14th, 2011, 03:43 PM #5 traitor786     Join Date: Jan 2011 Location: montreal Posts: 803 the attachment Quote
 Jun 14th, 2011, 05:06 PM #6 traitor786     Join Date: Jan 2011 Location: montreal Posts: 803 In the third post we now see that the channel has been expanded. Lets examine the basic rules for expanding channels and add them on to the list as point B RULE for channels To create a down trend channel 1. 1st draw top line connecting highs 2. Then draw a bottom parallel line. For the bottom line use the *SWING LOW mid point of the top line. 3 In a down trend, we first make the bottom line and then copy (make a parallel line) to the top 4. a channel by definition is 2 parallel lines that income most of the trend. 5. Trends need to be adjusted from time to time under a set of rules B. Expanding channels 1. Channels can be changed and expanded. 2. A channel can be expanded if a higher high is made. 3. We will put our trend line now at the next highest swing low That is, the higher low above the previous one. Questions There is some confusion between next "highest swing low" and "higher low". Are these 2 concepts the same? What if the next highest swing low is not as low as in the picture? In this case, is it OK to cut off the bottoms of the other previous lows? Or should we try to include all lows in to the channel at this point ? Also, can we change the slope or steepness at this point? Can the top of the channel also be adjusted if need be. I will now go see if I can find the answers to these questions to clear things up. from there we will see if there is any interest by users in this thread. If so, we will continue. I know its very basic stuff. But we have to start some where. By looking at more advanced concepts and finding the basic reasoning behind them, we have a bit more interest in learning. Also we develop a sense for the more advanced ideas as explained in the other thread. Hopefully, as time goes on, we will have covered much of the basics. Quote