On November 19, 2021, Turbo Trading's Head Trader Robert Knight, MBA explains why he trades channel trades using stock $LAC as an example. A transcript is below the video.
This is a video on an example of a channel trade. A couple of things, $LAC is one of our swing trades. We're in it at around $17 I think it is. Let me just quickly look. Yeah, 17 and a quarter. So this is a channel trade for sure. And this is how we're staying in this as a swing trade, you know, pop one, two, this is week three, and this could trade up to the top of the channel up in here. But what I wanted to show now today is how a channel trade works for just a Day Trade.
This is the kind of pattern, where this is institutions need to own the stock. And they just, every time it gets down to this, 15-period moving average, they just buy it. Or this trend line, they just keep buying, buying, buying. So it has tons of support to it. But this is how we make the big money in a trade.
Here, if you add it in. On this pullback or maybe the first pullback entry up here around $34.65. You know, it was up $3 on the day and it's a low-risk, low-stress kind of trade. Relative. I mean, there's always a risk, but lower risk. It just gets into this channel. Now when you first had the channel would have looked like this and it came down, it held the support, and started to go.
So you just need the fan out the channel. And every time it comes down to the channel line, it does get through it a bit. But so you just keep fanning it out. Here and then now it's a very solid channel line. Now we can see that it's going, it's breaking down here. We'd want to stop this.
If you're in this trade, you'd want to stop this, under this probably $37 level, now, because it is coming out of the channel. This could be support for it here, right around $37, which is the 34-period moving average, or even here at $36.85. And it has big support here at $36.70, but to stay in this trade, there's no reason to panic and get out of it. You can just stay in it, let it run, let it run. And it does take some nerve. There's no doubt, you know, because especially if you've been red, a number of last trades, you're just happy to see a little green on you. You sell the stock, but you have to get over that fear and just trade with conviction.
And when you see a trade like this, just stay in it and let it run as long as you can. And then, you know, look for support levels, $37 at breaks below that. And then $36.85, you need to be out of this trade on a day trade basis. But, the perfect channel trade, this is how we make the big money here at Turbo Trading, is we get into these channels and we stay in and we let them run.