Donchian Channel

The Donchian channel is an indicator used in forex market trading developed by Richard Donchian. 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. the Donchian channel is known under the term 4 week rule and works as follows

if hte current price of high of the last four weeks beyond, a long position is opened . exists at the same time a short position, it closes . If the price falls below the low of the last four weeks is along position is closed or built up a short position

Donchian channels , keltner channels and starc bands are not as well known as bollinger bands, but they offer comparable opportunities, the trading approach the donchian channel is a pure trend following system and sets the principle of "buying in strength , selling in weakness" directly . it is a breakout system and was used by the turtles

Investopedia explains donchian channels the donchian channel is a simple trend following breakout system. for this indicator, the highs and lows of the last n days are drawn as lines above and below the share price. the four weeks are 20 trading days , In his early days when they used the donchian channel current system for entering a long position that exceeds the maximum 20 day course and for the withdrawal falling below the 10 day low. description and example of the donchian channel , including its definition, calculation, and basic use in trading, Conversely the company entered into short position in a 20 day low and get off at a 10 day high , for long term systems used to do when entering the 20 days and 55 days instead of 10 days at the exit they took 20 days . in addition, volatility based stops and used it as a volatility based methid for determining position.

current research finding shows that work today , the long term outbreaks 40 - 100 days better than the short term. the approach of the past few decades has become popular .

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