//--------------------------------------------------------------------------------------------------------------------------
//------------------------------------------------------------------------------------------------------------------------------
Donchian Channel Trader is an indicator designed with the full capabilities to trade the Donchian Channel. This indicator combines price action with the Donchian channel by scanning Pin-Bar and Engulfing Bar patterns around channel lines. The indicator is also equipped with over 4 filters including Currency Strength Meter to ensure high probability trading.
Developed by Richard Donchian, Donchian Channel is a price action based channel formulated by taking the highest and lowest price over the last n periods. The upper channel is the highest price over the last n periods and the lower channel is the lowest price over the last n periods.
Formula:
Upper Channel: Highest Price over last 'n' period
Lower Envelope: Lowest Price over last 'n' period
Where n, is the number of previously formed bars
Features
- Donchian Trader trades breakout and reversal patterns around the channel lines
- Non-repainting confirmation signals
- Gives Pre-signals before confirmation signals
- Over 4 trade filters to ensure high probability trading
- Currency Strength Meter: Measures the strength of a currency with 28 currency basket. This filters signals with enough momentum to reach target profit
- Trend Filter: The indicator uses 200(optional) Moving Average line as a trend filter. This is a popular trend filter used by pro day traders.
- Trend Strength Filter: Uses ADX to measure stage of the trend to ensure trades are not entered when trend is exhausted.
- Primary Filters: The indicator has an inbuilt momentum filters that uses RSI and Volume to ensure the current move has enough momentum to be valid.
- The indicator has support and resistance lines that serves as stop loss level.
- The indicator has ATR value display that serves as target profit.
- Timeframes: Use on all Timeframes lower than D1
- Trading Pairs: Use on all pairs
TRADING RULES
BUY : entry (On Buy arrow signal, ensure the currency strength meter arrow appears and pointing up, then take buy trade.)
exits (1. Stop loss should be placed at the support(red line)
2. Exit on opposite sell arrow if trade is in profit .
3. Use ATR value as your first profit target . You can break even, partially close or fully close trade here.
4. Trail stop loss using ascending support lines as price goes in trade direction.
SELL : entry (On Sell arrow signal, ensure the currency strength meter arrow appears and pointing down, then take sell trade.)
exits (1. Stop loss should be placed at the resistance(blue line)
2. Exit on opposite buy arrow if trade is in profit .
3. Use ATR value as your first profit target . You can break even, partially close or fully close trade here.
4. Trail stop loss using descending resistance lines as price goes in trade direction.
Inputs
- BARS: Indicator plotting
- Donchian Period: From formula above
- Show Channel Breakout (true/false): Enable / Disable breakout signals
- Enable Normal Breakout (true/false): As implied
- Enable Engulfing Pattern Breakout (true/false): As implied
- ATR_Breakout_Ratio: To define minimum breakout distance
- ATR_Period: For target profit and breakout ratio calculations
- Show Channel Reversal (true/false): Enable / Disable reversal signals
- Enable Normal Reversal (true/false): As implied
- Enable Engulfing Pattern Reversal (true/false): As implied
- Enable Pinbar Reversal Pattern (true/false): As implied
- Give Pre-signal (true/false): Enable / Disable pre signals
- Use MA Trend Filter (true/false): Signal filter
- MA Period: MA filter period
- Confirm Alerts with currency Strength (true/false): Signal Filter/ Alert Filter
- Minimum Currency Strength offset: As implied
- Use Trend Strength Filter(true/false): Signal filter
- Display Trend Strength Panel (true/false): Panel Display
- Display Currency Meter Panel (true/false): Panel Display
- Display ATR: Panel Display
- Show Support and Resistance (true/false): SR lines on chart
- Display Title colors: Panel Title colors
- Display Text colors: Panel Text colors
- Sound_Alert: Notification
- Email_Alert: Notification
- Phone_Alert: Notification
Note:
- Endeavor to use Currency Strength in filtering your signals, that is the juice of the entire system.
- Because MetaTrader 4 does not allow multi-pair testing, currency Strength values in the strategy tester are not the correct values because only one pair is scanned in tester while 28 pairs are scanned in real environment.
- Some signal types and filters are disabled by default, you can enable them in the input menu.
Good luck and happy trading.
