High-Profit Donchian Channels Turtle System – The Donchian Channel is a useful indicator for seeing the volatility of a market price. It is formed by taking the highest high and the lowest low of the last n periods. The area between the high and the low is the channel for the period chosen.
Take a look at the image above…
- If a price is stable the Donchian Channel (magenta color line) will be relatively narrow.
- If the price fluctuates a lot the Donchian Channel will be wider.
The Donchian Channel indicator primary use, however, is for providing signals for long (BUY) and short (SELL) positions.
If a currency pair trades above its highest n periods high, then a LONG is established. If it trades below its lowest n periods low, then a SHORT is established.
The Donchian Channel indicator works on all time frames, such as one-minute or five-minute charts, and can be applied to forex, stocks, options, or futures markets.
Here are variations of the Donchian Channel basic strategy:
- Not all moves above the upper band, or drops below the lower band, warrant a trade.
Add a trade filter indicator, such as a moving average, to aid in highlighting the trend.
Only take long trades if the price is above the moving average, and only take short trades if the price is below the moving average.
- During a STEADY UPTREND, the price may pullback to the lower band.
This is also a potential area to BUY since the overall trend is up. During a steady downtrend, the price may pullback to the upper band.
As long as the trend is down, SELL trades can be taken near the upper band. The mid-band can also be used for such trade signals.
- Use a longer period Donchian Channel for entries, such as the 20-period, then use a smaller period, such as a 15, for exits.
Having two sets of Donchian Channels on the screen may make it appear cluttered, so apply different colors to the different channels to distinguish them from each other.
BUY when the price rises above the upper band of the longer period (20) channel, and exit when the price falls below the lower band of the shorter period (15) channel.
SELL when the price falls above the lower band of the longer period channel, and exit when the price rises above the upper band of the shorter period channel.
The Donchian Channels indicator is a simple but effective indicator that plots the highest high and the lowest low over a set period of time.
It is useful for identifying price breakouts and is used in some trend-following systems.
This “ForexWOT Donchian Channels Turtle Trading System” uses a 10-day price breakout for entry. And the entry was filtered by some rules that were designed to increase the odds of catching a big trend.
- Best Time Frames: M15, M30, H1, H4, D1, W1, and MN (this system works on all time frames)
- Most Recommended Currency Pairs: EURUSD, GBPUSD, USDJPY (all currency pairs)
- Donchian Channels
- Super Signal Channels
- Signal Trend
- Stochastic Slope
- Williams’ Percent Range
- Green color arrow Super Signal Channels
- The price rises above the upper band of the Donchian Channels indicator
- Signal Trend green color bars
- Stochastic Slope bullish
- Williams’ Percent Range line upward and above -50 level
- Red color arrow Super Signal Channels
- The price down below the lower band of the Donchian Channels indicator
- Signal Trend red color bars
- Stochastic Slope bearish
- Williams’ Percent Range line downward and below -50 level
We now know that the Donchian Channels indicator is a simple but effective indicator that plots the highest high and the lowest low over a set period of time. It is useful for identifying price breakouts and is used in some trend-following systems.
The Donchian Channels indicator is available in numerous versions for MT4 and produces false signals that can be minimized with filters.
Markets have changed a lot over the years, so even the original Turtle strategy needs some serious modifications. And the “ForexWOT Donchian Channels Turtle Trading System” is the best answer for you.
Additionally, the Donchian channels can be used in many different ways, so feel free to experiment with a risk and cost-free demo account before opening a high-risk, high-reward live account.