High Profits Forex Richard Donchian Channel Breakout Trend Following Trading System – How To Use The Donchian Channel For Breakout And Trend-Following Traders.
The Donchian Channel is formed by taking the highest high of x length of time, and the lowest low of the same x number of days, then marking the region between those values on a stock chart.
The Donchian channel is a helpful indicator for watching the volatility of a market price. When a price is stable the Donchian channel will be reasonably slim. In case the price fluctuates a lot the Donchian channel is going to be fatter.
Its main use, having said that, is designed for providing signals for long and short positions.
If price above its highest x day high, then a long trade is made. When it trades below its lowest x day low, then a short position is entered into.
They’re very helpful for predicting support and resistance levels of price and define boundaries for price action.
Richard Donchian Channel Breakout Trading Rules
Forex Richard Donchian Channel Breakout Trend Following Trading System is an interpretation of the waves of the markets. The trading system is more to the Donchian channels and we will discuss how to increase the quality of the signals.
This trading system is intraday or short term swing trading.
- Best time frame : H1, H4, and D1 (daily)
- Markets : Forex, Indicies (S&P 500, Dax, FTSE, Dow Jones).
Metatrader Trading Indicators
- Donchian Bands
- Signal Trend
- RSI (7)
- A info;
- SHI signal ( 0, 17, 13, true);
- Trader wavasam (3,2,1,1,1);
- Parabolic indicator( 0.02, 0.2);
- vs Pivots D or THV 4 Pivots;
- FX Fish (10 period);
- The price above highest high Donchian Bands
- Signal Trend green color
- RSI (7) line upward and above 50 level
- Price above blue color Trader wavasan and Parabolic indicator
- FX Fish (10 period) green color
- The price below lowest low Donchian Bands
- Signal Trend red color
- RSI (7) line downward and below 50 level
- Price below red color Trader wavasan and Parabolic indicator
- FX Fish (10 period) red color
Of course, not all breakouts are going to be successful and there is no way to generate a 100% accurate system, but there are ways to increase the quality of entry signals for the Donchian channel.
We added the RSI strength and FX Fish indicator to filter out low-momentum breakouts which are often false breakouts.