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Finance Dictionary and Glossary of Investment Terms
A channel (upper and lower lines) that typically shows the trailing 20-day high and 20-day low. The trading strategy based on the price channel is one of the simplest and oldest trend-following models. It requires no calculations. The rules are: Buy when the weekly closing price moves up to a new 20-period high; sell and sell short when the weekly closing price moves down to a new 20-period low. In other words, when the price moves out of its channel, trade in the direction of this new trend.When using Investor charts to study price channels, you can select whatever time period works best for your investing strategy. Check this feature out in Investor''s Stock area under the Charts tab on the left navigation bar.