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Easiest Donchian channel trick that made me good profit

(Last Updated On: 12th January 2022)

Donchian channel is a trend indicator that uses three lines generated by moving average calculations in which the mid-band is the average of upper channels and lower channels.

This is a really popular indicator and can be used in any market or time frame. In this article, I will exactly show you the easiest Donchian channel strategy that you can use while trading.

What is the Donchian Channel Indicator?

The Donchian Channel is an indicator used by traders to find the possible range of trends. and was developed by Richard Donchian.

This indicator is really helpful in seeing the volatility of the security price.

This indicator uses three-line generated by Moving Average calculation that compromises an indicator formed by upper & lower band around a midrange or median band.

 

Formula:

Upper Line (UC) = Highest high in N periods

Lower Line (LC)= Lower low in N periods

Midline = ( Upper line + Lower line) / 2

Where,

UC = Upper channel

N = Number of minutes, hours, days, weeks, months.

Periods = minutes, hours, days, weeks, months.

LC = Lower channel.

Setup Donchian channel in Olymp Trade

Setting up the Donchian channel in Olymp Trade is very easy. Once you logged in firstly click on the indicator button.

You can always adjust the period, thickness, and colours of lines by clicking on the pencil icon.

 

How to Trade properly with the indicator?

Trading with the Donchian channel is very easy.

You just need to remember the golden rule:

The golden rule of the Dochian channel says:

If the upper line is near or close to the resistance level then the market may turn upside down so, here we should take a sell trade.

Similarly, If the lower line is near or close to the support level then the market may turn upside up so, here we should take a buy trade.

Given above is a 1-hour chart and we can clearly see that the Donchian channel upper line is near the resistance level so, here we can take a sell Trade.

Similarly, Given above is a 1-hour chart and we can clearly see that the Donchian channel lower line is near the support level so, here we can take a buy Trade.

Final thoughts:

Donchian channel is one of the most popular trading indicators that uses three lines generated by moving average calculation where the midline is the average of upper line and lower line.

This indicator was developed by Richard Donchian and can be used in any market and time frame.

In this article. I have exactly discussed on How to set up a Donchian channel in Olymp Trade and how to trade with the same.

You just need to remember the golden rule If the upper line is near the resistance level then you should take a sell trade. Similarly, If the lower line is near the support level go for a buy trade.

So, that’s it!! This is the end of this article. I hope you found this article helpful. do comment your thoughts below.

 

 

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