Trading with the Donchian Channel Indicator
Author: Victor Gryazin
In this review, we will get acquainted with a quite simple and useful indicator called Donchian Channel. This is the indicator that the famous Turtle trend strategy is based on.
How does the Donchian Channel work?
The Donchian Channel is quite a simple channel indicator reflecting the borders of price fluctuation in a preset time interval. The indicator was named after its creator, a famous exchange trader of Armenian origin Richard Donchian.
The indicator looks like a price channel with an upper and lower borders, inside which the quotation fluctuate. To draw a border, the Donchian Channel calculates the latest extremes, taking the highest high and the lowest low of the period.
The indicator acquired popularity after a trend strategy called Turtle Trading System was based on it. This famous strategy by Richard Dennis uses a breakaway of the Donchian Channel’s border with the period of 20 days as the entry point. A group of beginner traders demonstrated good results following this strategy.
In essence, the Donchian Channel may be called an indicator of volatility because it is based on calculating the price range based on recent highs and lows. The wider the channel, the higher the current volatility; when the channel narrows down, the volatility of the instrument temporarily decreases.
https://blog.roboforex.com/wp-content/uploads/2020/08/donchian-1002x630.png
Installing and setting up the indicator
The Donchian Channel is included not in every trading terminal; hence, you might need to download a file of the indicator and set it up in your terminal. You can download the indicator for MetaTrader 4 by a link in the end of this article.
To install the indicator, copy the file to the Indicators folder. Via the Main Menu, open File/Open data catalog/MQL 4/Indicators, copy the file, and restart the terminal.
As a result, the Donchian Channel will appear on the list of user indicators and will become available for the charts of your instruments: open Insert/Indicators/User/Donchian Channel. Or just left-click the indicator in the Navigate window and drag to the chart.
The calculations are quite simple
Read more at R Blog - RoboForex
Sincerely,
RoboForex team
Author: Victor Gryazin
In this review, we will get acquainted with a quite simple and useful indicator called Donchian Channel. This is the indicator that the famous Turtle trend strategy is based on.
How does the Donchian Channel work?
The Donchian Channel is quite a simple channel indicator reflecting the borders of price fluctuation in a preset time interval. The indicator was named after its creator, a famous exchange trader of Armenian origin Richard Donchian.
The indicator looks like a price channel with an upper and lower borders, inside which the quotation fluctuate. To draw a border, the Donchian Channel calculates the latest extremes, taking the highest high and the lowest low of the period.
The indicator acquired popularity after a trend strategy called Turtle Trading System was based on it. This famous strategy by Richard Dennis uses a breakaway of the Donchian Channel’s border with the period of 20 days as the entry point. A group of beginner traders demonstrated good results following this strategy.
In essence, the Donchian Channel may be called an indicator of volatility because it is based on calculating the price range based on recent highs and lows. The wider the channel, the higher the current volatility; when the channel narrows down, the volatility of the instrument temporarily decreases.
https://blog.roboforex.com/wp-content/uploads/2020/08/donchian-1002x630.png
Installing and setting up the indicator
The Donchian Channel is included not in every trading terminal; hence, you might need to download a file of the indicator and set it up in your terminal. You can download the indicator for MetaTrader 4 by a link in the end of this article.
To install the indicator, copy the file to the Indicators folder. Via the Main Menu, open File/Open data catalog/MQL 4/Indicators, copy the file, and restart the terminal.
As a result, the Donchian Channel will appear on the list of user indicators and will become available for the charts of your instruments: open Insert/Indicators/User/Donchian Channel. Or just left-click the indicator in the Navigate window and drag to the chart.
The calculations are quite simple
Read more at R Blog - RoboForex
Sincerely,
RoboForex team
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