Recent Mentoring Question:

"Hi Ian - recently in WICS you were discussing 'channel formations' but as a newcomer to financial spread trading, I'm still a little confused by this. I can't see anything about these in the manual. Could you perhaps elaborate on how to use these channels in our trading? Many thanks in advance,
Bill H."

My reply: "No problem Bill. Essentially, what we're looking for with a channel, is a formation that runs 'counter' to the overall trend - for example, an 'up' channel in a downtrend, and vice versa. Once we have identified one by drawing two parallel lines, we're then looking for a breakout, back in the direction of the original trend. But often, such a breakout just 'fizzles out' so in the TTEW methodology, we wait for a retrace and then only take a trade IF after that retrace, the price again resumes the earlier trend. Please see the attached chart that I've annotated for you - a picture probably will make things a bit easier for you to see! Any problem, don't hesitate to ask for clarification."