Donchian Channel Double Breakout Trading System uses a couple of dynamic Donchian Bands to plot the trading channel that leads traders to breakout trading opportunities. Moreover, these bands also help traders to define the trade exit points at live markets.
This Trading System follows a very simple trading strategy and very much suitable for newbie breakout traders. Furthermore, this system can be applied to trade all kinds of forex currency pairs and fits great with all sorts of timeframe charts as well.
Donchian Channel Double Breakout Trading System Overview
After the installation of the System at the MT4 platform, the tour trading chart will appear like the following image:
Donchian Channel Double Breakout Trading System Anatomy
- Donchian Bands 55: Used to find the intraday breakout trade setups. Price moves above its upper band are considered as the bullish breakout representing the buy opportunities. Contrarily, price breaks its lower band means the bearish breakout with sell opportunities.
- Donchian Bands 20: This tool works in the same manner as Donchian Bands 55. The only difference is Donchian Bands 20 works to find short-term breakout trading opportunities and mostly used by the breakout scalpers.
- Donchian Mid-Band: This single line band works as a trend detector as like as Moving Averages. Price closing above its level indicates the bullish trend of the market and closing below its level represents the trend as bearish.
Generally Accepted Use
To go for long entry
- Price closes above the Donchian Mid-Band
- Buy triggers whenever price breaks and moves above the upper channel of Donchian Bands 20 or 55
- Set stop loss below the current lower channel of Donchian Bands 20 or 55
- Exit long/take profit whenever price returns back inside the Donchian Bands 20 area
To go for short entry
- Price closes below the Donchian Mid-Band
- Sell triggers whenever price breaks and moves below the lower channel of Donchian Bands 20 or 55
- Set stop loss above the current upper channel of Donchian Bands 20 or 55
- Exit short/take profit whenever price returns back inside the Donchian Bands 20 area