Donchian Channel is one of the most widely used trend indicators that you can easily find on the Olymp Trade trading platform.
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. It uses three-line generated by Moving Average calculation that compromises an indicator formed by upper & lower band around a midrange or median band.
Upper Line (UC) = Highest high in N periods
Lower Line (LC)= Lower low in N periods
Midline = ( Upper line + Lower line) / 2
UC = Upper channel
N = Number of minutes, hours, days, weeks, months.
Periods = minutes, hours, days, weeks, months.
LC = Lower channel.
Configure Donchian channel on the Olymp Trade trading platform
You can always adjust the period, thickness, and colours of lines by clicking on the pencil icon.
How to use Donchian channel at Olymp Trade
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.
So, you have just obtained proper knowledge on Donchian Channel Indicator. I hope you have understood the concept properly. The best way to understand any indicator is by practising the same in the Olymp Trade demo account. and check if the indicator is working for you or not. don’t hesitate to comment below if you are facing any issues.