|Supported Platforms:||Tradestation, MultiCharts|
|Market:||All (Stock, Futures, Forex, Options)|
|Timeframe:||Any Time Frame|
|Trading Style:||BreakOut, Swing, Reversals|
|Subscription:||Yearly / Monthly via Strategy Network|
|TradeStation Strategy Network:|
DIG Donchian Channel Explained:
The Donchian Channel is a very popular volatility indicator, that calculates the recent price range by studying the recent highs and lows. It is mostly used to find trends and reversals. The Donchian Channel gives better market insights when the market is trendy. The indicator is displayed as a channel, the price action is contained within the upper and lower bands. It was originally developed by Richard Donchian back in the late 1940s hence its name DONCHIAN.
What is the Donchain channel good for ( Short answer plenty, Long answer read below )
The Donchian channel is used a variety of ways, below 2 examples are provided.
Donchian Channel as an Entry Signal
As we explained above the Donchian Channel contains the price movement between its Upper and Lower band. Each time the price hits the Lower Band, that means its down trending (Bearish) and you should Go Short, or stay on the sidelines and wait. Same goes for Long, each time the price action hits the Upper Band, that means its up trending (Bullish) and you should Go Long, or stay and wait.
ATPG 60 Min Chart:
You can see that when the Donchian is broken upward, we have a clear Bearish Trend confirmation.
Donchian Channel as Exit Signal
As we explained above a breakthrough of the channel indicates a trend to the direction of the break is accruing. Now this signal can also be used to exit a short trade. When we entered a long trade we can exit it when the lower band is broken.
SCSS 60 Min Chart:
Long Entry when the upper band is broken, and then Exit when the lower band is broken. This trade captures a very nice move. A word from our experts, when using Donchian as an exit, it should be used on a lower time frame or with a shorter length then the entry signal.
- Adjustable Length for both the upper and lower band
- Adjust the calculation type according your trading style ( High Low / Close )
- Easy To use
- Compatible with RadarScreen
See the Donchian Channel in action – additional screenshots:
|AAPL – Daily||Dow – 15 Min||JPM – 60 Min||MMM – 15 Min|
Get a yearly subscription for the Donchian Channel:
After purchase, the code will be sent to your email with instructions on how to install & use it. It usually takes us 24 to send the product.
If you like, we can modify this indicator to your specific needs: Adding custom features, alerts, Radar Screen compatibility, Multi Time Frame functionality & much more -> Get a quote
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