ETFreplay blog | Channel Backtest Example –

Channels are simple supplement that offer an ABSOLUTE look and can be used in conjunction with other RELATIVE studies. Wider channels give your trade room to work. Tighter channels will cause whipsaw losses. If you are bullish on an ETF based on a range of factors, then running a skewed channel might be a good idea — ie, run the exit at 0% but a buy at just 60%… This allows you to get in quickly while still offering room for the investment to work. This study uses a simple 67% / 33% buy/sell trigger with a 6 month lookback (26-weeks). Entries and exits only occur on the close of the last day of the week (Fridays) allowing for easy monitoring.