Trading in forex can be a difficult at times and sometimes is a rock best left unturned. Channel trading is a great example of this paradigm. Channel trading is what happens when a currency reaches a point of pause between the buyers and sellers of the pair. In this example the Pound vs the Dollar are used to show an what channel trading looks like.
Here, the GBPUSD is moving in about a 30-40 pip channel over a period of several hours. This doesn’t leave a lot of room to trade this pair. Riskier traders might try to get in at the top/bottom of one of the peaks or valleys and ride it down/up, but as with any channel trading the market soon moves up or down and if you have guessed the wrong direction you will be stopped out. In this example there are 4 valleys and peaks to trade off of and a perfect entry would have resulted in a nice 30+ pip profit. But the true risk lies in a change in the market. When channel trading comes to an end it usually is followed by a rapid moving direction as the currency pair settles on a new direction. You may or may not have guessed the right direction. And that is the lesson here, guessing is a game in Vegas played at slot machines, not something we want in Forex trading.