The CAC 40 (Cotation Assistée en Continu) represents the French stock market index in the financial world. Professional long-term traders prefer to trade the CAC 40 due to clarity in trading signal and reliability in terms of long term investment. The Keltner channel indicator is used by many professional stock traders in the world in many different ways to trade market successfully in the longer time frame. \
The Keltner Channel indicator is often called as KC indicator. Long term professional traders trade the CAC 40 when the price dips inside the channel of the KC indicator. Let us see the how the professional use the KC indicator in CAC 40:
Figure: KC trading strategy for CAC 40
Professional traders wait patiently to take the trade in CAC 40 by using the KC indicator. The CAC 40 is only traded inside the KC indicator channel regardless of the market situation and economic events. The default value of the Keltner channel is changed in trading strategy. The new length value is set 100 and the multi-value are set to 4.In the above figure the price enter the Keltner Channel from above and the traders wait patiently for the minor retracement of price near the KC indicator resistance. Some traders set pending sell order in the dynamic resistance of the KC indicator.
Setting the stop loss is pretty simple in this trading strategy. The stop loss is placed just above the Keltner channel resistance in case of the sell signal. Long term trader book half of trading profit in the mid band of the Keltner channel and trails their stop-loss to the breakeven point with a price target to reach the bottom of the channel. It’s imperative that every trader uses proper risk reward ratio while trading this extremely profitable strategy in order to minimize the loss.