Donchian Channels


The Donchian Breakout trading system (rules and explanations further below) is a classic trend following system. As such, we included it in our State of Trend Following report, which aims to establish a benchmark to track the generic performance of trend following as a trading strategy.

Donchian Channel Breakout Trading Strategy is a channel breakout trading method based on metatrader 4 indicators. They are used to pinpoint current levels of support and resistance by identifying the high and low price on a graph, over the selected number of periods. Buy new 50 day highs and Sell Short 50 day lows.

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Mar 30,  · In case the price changes considerably the Donchian channel will be wider. Its main use, having said that, is designed .

Trades in progress are exited when the price hits the high or the low of the preceding X-days. This concept is the identical to Entry Breakout, but the logic is reversed: Long trades are exited when price hits the X-day low, and short trades are exited when the price hits the X-day low.

The Exit Breakout moves up or down with price. It protects against adverse price excursions, and also serves as a trailing stop that acts to lock in a profit when the trend reverses.

If the initial stop is held, then the initial stop price will be used to exit during the trade. If using the reversal exit, then the trade will be exited if the price hits the entry breakout for the opposite direction.

Likewise, a short position won't be exited until the price hits the normal breakout price, plus 1. A positive value effectively delays exit until the specified point after the breakout threshold chosen; a negative value would exit before the. Defined the number of days for the ATR calculation. This is an exponential moving average of. This is the number of days for the long moving average portion of the MACD indicator.

This is the number of days for the short moving average portion of the MACD indicator. Share your opinion, can help everyone to understand the forex strategy. Entry Breakout days A trade is entered when the price hits the high or the low of the preceding X-days. Exit Breakout days Trades in progress are exited when the price hits the high or the low of the preceding X-days. Note that trades are liquidated when price hits either the Exit Breakout, Entry Breakout for the opposite direction, or the Stop in ATR, whichever is closest to the price at the time.

A positive value effectively delays exit until the specified point after the breakout threshold chosen; a negative value would exit before the breakout threshold chosen.

This is an exponential moving average of the True Range. Write a comment Comments: When the price breaks upward the red line of the Donchian Channel 20 period. If there is a second breakout of the red line of the Donchian channel 20 does not enter, but get into position only if there is a breakout of the upper band of the Donchian channel 55 periods. When the price breaks downward the red line of the Donchian Channel 20 period.

If there is a second breakout of the red line of the Donchian channel 20 does not enter, but get into position only if there is a breakout of the lower band of the Donchian channel 55 periods. Exit position with Trailing Stop that depends by time frame and currency pair.

Place initial stopo loss 2 pips below or above the first green line. Trailing Stop 35 pips, place stop loss 2 pips below or above the first green line or fix stop loss at the 40 pips. Exit position also with Profit Target: After 20 pips in gain move stop loss 40 pips at the entry point. Double Donchian Channel Strategy.