FOREX CHANNEL TRADING SYSTEM

Forex Channel Trading (FCT) System: Buy and Sell Rules Summary

Overview

The Forex Channel Trading (FCT) system is a mechanical-based trading method designed with clear rules for identifying qualified trade entries. The system utilizes adaptive price channels to avoid trading in low volatility periods and focuses on trend-following setups for higher probability trades.

Buy Rules (Long Trade)

  1. Price Channel Zone: Price must trade into or below the lower blue channel zone (buy zone).
  2. Candle Close: A green candle close within or below the blue channel zone triggers a buy signal.
  3. FisherTransform3 Indicator: Must show a blue bar at candlestick close.
  4. Repulse2 Indicator: Must display a "hook up" pattern at candlestick close, ideally within the +0.40 to -0.40 level range. A "hook up" below -0.40 indicates a lower probability trade.

Sell Rules (Short Trade)

  1. Price Channel Zone: Price must trade into or above the upper red channel zone (sell zone).
  2. Candle Close: A red candle close within or above the red channel zone triggers a sell signal.
  3. FisherTransform3 Indicator: Must show a red bar at candlestick close.
  4. Repulse2 Indicator: Must display a "hook down" pattern at candlestick close, ideally within the +0.40 to -0.40 level range. A "hook down" above +0.40 indicates a lower probability trade.

Entry Execution

Enter trades at the open of the following candlestick after a qualified entry signal. Use "market" or "limit" orders, with limit orders preferred for better entry pricing and to avoid slippage.

Additional Considerations

Trend Following: Higher probability trade signals occur when following the current market trend. The system is effective for both trend-following and counter-trend trading, but trend-following trades generally have better follow-through.

Divergence Tracking: While not a requirement, tracking price/indicator divergences can add probability to trade entries, especially for counter-trend trades.

Volatility: The system is designed to avoid trades during low volatility periods by utilizing adaptive price channels that benchmark levels of deviation from the mean.

Summary

The FCT system's effectiveness lies in its structured approach to trade qualification, ensuring traders only enter trades with multiple confirming signals, thereby increasing the likelihood of successful trades.

Download