Trading Channeling Stocks

Channeling stocks or stocks that go up and down in a tight range often frustrate investors.



Ever heard of buy low, sell high phrase? Well, trading range bound stock can be great short term money making opportunity by shorting and going long within the range.

There are 3 types of channelling stocks or rolling stocks some may say:

1. Ascending-Stocks bounce up and down the channel in a an uptrend.
2. Descending-Stocks bounce up and down the channel in a downtrend.
3. Horizontal-Stocks bounce up and down support and resistance level in a horizontal trading range.

Trading Range Bound Stocks

Here are a few ways of trading rolling stocks

1. Go long just above the high of the 1st bar, when stock bounce up from support line.
2. Go short just below the low of the 1st bar when stock bounce down from resistance line.
3. Go long when stock breakout of the channel to the upside
4. Go short when stock breakout to the channel to downside

Channelling stocks appear on all time frames including intrady. I normally use point 1 and 2 for short term like a few days to weeks and prefer trading horizontal rolling stocks. The chart below shows a good example of this strategy.

You can use this strategy for spread betting, CFD trading, options, and covered call options if you are a bit conservative and want to protect the downside.

How To Find Rangebound Stocks To Trade

You use technical analysis filter to scan stocks to trade. The one I used before is Telechart/Worden and the first 30 days are free. Here are my stock scans setting if you want to use the software.

Rangebound Stocks Scanner From Ramp
I came across this software that can scan channeling stocks , known as Bob Charts Scan, as well as stocks that is about to bounce off support and trend lines.

It can also scan data from Telechart to find those stocks for you.

This software is ideal if you only want to get in and out of the trade for a short time only. Ramp software creator used Telechart before and you can buy a cd on Telechart PCF scan if you are not sure how to set up the scan feature.

If you are interested in profiting from this trading technique, but wants to follow some experts who reveals secrets that Wall Street don't wants you to know, then I suggest giving this site a try. Click here for channeling stocks list