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Donchian Channel Forex Trend Momentum Trading Strategy (7500)


High accuracy “MA Donchian Channel Forex Trading Strategy” – The Donchian channel is a useful indicator for seeing the volatility of a market price.

If a price is stable the Donchian channel will be relatively narrow. If the price fluctuates a lot the Donchian channel will be wider.

Its primary use, however, is for providing signals for long and short positions.

If a security 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.

  • Time Frame: M5 or higher
  • Currency Pairs: Any

 

MetaTrader Trading Indicators
  • Moving Average
  • AY Donchian Channel
  • Real MACD
  • Force Index
  • Eslanek ScotLowry

Limitations of Using Donchian Channels  – Markets move according to many cycles of activity. An arbitrary or commonly used N period value for Donchian Channels may not reflect current market conditions, generating false signals that can undermine trading and investment performance.

Trading the 4-hour and above is the best approach for “Donchian Channel Trend Momentum Strategy“, so I am always interested in looking at other peoples swing trading systems that use these timeframes.

How to install Donchian Channel Trend Momentum Trading System
  • Download TraderVersity.Com-DonchianChannelSystemTrendMomentum (Zip File)
  • Copy mq4 and ex4 files to your Metatrader Directory …/experts/indicators /
  • Copy the “TraderVersity.Com-DonchianChannelSystemTrendMomentum.tpl” file (template) to your Metatrader Directory …/templates /
  • Start or restart your Metatrader Client
  • Select Chart and Timeframe where you want to test your forex system
  • Right-click on your trading chart and hover on “Template”
  • Move right to select TraderVersity.Com-DonchianChannelSystemTrendMomentum
  • You will see “Donchian Channel Trend Momentum Trading System” is available on your Chart

 

BUY Rules

Trading NOTES

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  • Moving Average: Price closed above the MA line
  • AY Donchian Channel: Price above its last highest high n Donchian Channel high
  • Real MACD:
    • Histogram > 0 level
    • Blue MA line > Red MA line
  • Force Index: Above level 0 line
  • Eslanek ScotLowry: Most time frames are blue

 

SELL Rules

  • Moving Average: Price closed below the MA line
  • AY Donchian Channel: Price below its last lowest low n Donchian Channel low
  • Real MACD:
    • Histogram < 0 level
    • Blue MA line < Red MA line
  • Force Index: Below level 0 line
  • Eslanek ScotLowry: Most time frames are red

 

Trading NOTES

This article is not only meant to show you how to use the Donchian channel indicator, but it also has another message as well: you have to be conscious of your trading style and build your approach around your goals.

As a breakout and trend-following trader, look for momentum and sentiment tools that help you read what is going on and filter out trades with a lower probability.

On the other hand, if you fade false-breakouts, look for tools that help you identify low momentum price movements into high-impact price areas.

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