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Basic Concepts

The Philosophy of Channeling Stocks

Channeling Stocks have a very clear and identifiable historical pattern. Stocks that Channel up and down in repeated waves. Notice in the example how the price Channels from $3.25 to $4.10 per share. Where would you think the price is going next?

These waves may become predictable. If you answered that the price is probably going to go up, you understand the very basic strategy of Channeling Stocks. Look at the chart below and see what actually happened to the price of WNI when we add another 8 days worth of data.

In addition, a line can be drawn across the peak and along the bottom. The area between these two lines is called the channel. The upper line is commonly referred to as the resistance level and the lower line is referred to as the support level. It is in this area that you will want to buy and sell your stock. Selling your stocks is the key. When investing in the stock market, it is not when you buy that counts it’s when you sell. You should know when you are going to sell your stock before you even buy them. Knowing when you are going to sell before you buy the stocks helps eliminate the emotional factors of fear or greed that sometimes push or pull individual investors. As you become more familiar with Channeling Stocks.com. we are confident the nervousness of being an investor will subside.

Do the Math

The following is a true life example of how one could have profited using the Channeling Stocks.com concepts. Our example will not include any commission amounts as they vary from broker to broker. Also, while we have rounded all the numbers off, it will not interfere with the actual results. We will also be referencing something called a GTC (Good ‘Til Canceled). A GTC order is an order placed by an investor that instructs the broker that the order shall remain in effect until it is filled (either bought or sold at a predetermined price), or canceled by the investor. Annual percentage returns figures will be further defined when you get to the Practice Trading page.

In less than 6 months you could have bought and sold shares of a company with the symbol WNI on 4 different occasions. Each time you bought and sold this stock you would have taken in a profit of 50 cents per share. WNI had established a support level of $3.25 and a resistance level of $4.10. So your buying price in this stock would be set at $3.50 and your selling price would be at $4.00. As you can see, you are not going to be buying at the lowest possible price nor will you be selling at the highest possible price. The reason for this is simple. When you buy into a Channeling Stock, you will always want to insure that the price has reached the lowest level and has now begun its channel back up. There is no way to determine the absolute bottom until you see it going back up. The same holds true for the highest possible price but you have already addressed this by knowing when you were going to sell the stock prior to even buying it. There is more in-depth detail regarding this on our Advanced Concepts page.

* Channel #2 on the chart above should show Selling Date of 2/9 — not 2/8. *