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What Are Donchian Channels?

Donchian channels are a tool in technical analysis used to determine the relative volatility of a market and the potential for price breakouts. To form it, two lines are generated from moving average calculations that produce a filled-in channel formed by upper and lower bands. The upper band marks the highest price of a security over a period, while the lower band marks the lowest price of a security over that time. While relatively simple, it's quite helpful in highlighting trends and can suggest the right time to enter or exit a position.

Donchian Strategy associated to the moving average 9/50 crossover and the CCI

Donchian strategy is based on price action, hitting the top or bottom range. If top, we need 2 green bars hitting the top, showing a pulse, the a first red bar with a second red bar to confirm the pullback. We buy when the CCI shows that price is out of oversold region, sell when price is out of overbought region. Eventually, wait until price crosses below the EMA 9. Opposite when buying potential.

Action

Set the number of contracts, the stop loss limit, target profit. The strategy had been fully tested on Ninjatrader 8, with NQ. Keep a trailing stop loss to pass evaluations, in order to keep safe your trailing drawdown. The strategy will exit when 2 opposite color bars are showing up. If you are long, once 2 red bars appear, the strategy remove 1 contract each time.

Free Live Session

In order to understand the strategies, we offer you a free live session from 9:35am to 11am NYC time.Target profit with NQ, 5 minutes timeframe if $1000.

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Disclaimer

I do not sell signals or give any advice on which trade to take, just personal opinion. Please do your own research & never trade with money you cannot afford to lose as the fail rate in the industry is very high. FollowMyLead is not a financial adviser, it does not provide legal, tax or accounting advice. You should consult your own legal/tax advisers before making any financial decisions. This is for entertainment purpose only. Also note FollowMyLead is not responsible for any trades or losses that you made. Trading involves substantial risk of loss and is not suitable for everyone.