“Donchian” Channel Breakout Entry MQ4 Indicator – Donchian Channels is a popular indicator for determining volatility in market prices. Donchian channels are wider when there are heavy price fluctuations and narrow when prices are relatively flat.
Generally, investors use 20-periods with the Donchian Channels as the default trading setting, but this value can be tweaked based on your trading style.
The indicator simply takes a user-defined number of periods and calculates the upper and lower bands. It plots two lines on the chart according to the Donchian channel formula.
This straightforward formula says that:
- the upper line is the highest price for the last n periods;
- the lower line is the lowest price for the last n periods.
The default value for n is set as 20 in MetaTrader 4, but you can set it at whatever value you prefer. However, some versions of the Donchian channel indicator also plot a third line.
This centreline is simply the mean of the upper and lower values – namely, the centreline = ( n-period high + n-period low) /2.