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Let's talk Donchian Breakouts

  • #61
  • Nov 20, 2010 4:41pm Nov 20, 2010 4:41pm
Quoting tdion
Lot of views but no responses

I know people like specifics, so I'll just say that my use of DB is to only take shorts on the bottom breakouts, and change to longs only after an upper breakout occurs.

Like I said, DB is not the entry criteria for me, but just the market's sentiment in recent days.... I suppose an RSI or some other TA may work as well, but DB lets you know that you've truly broken a resistance level.



And to anyone who does not know what a Donchian Breakout is, google it. Real dollars are in play from this wallet on it.
idea...Price may spike enormously on surprising/unexpected news releases and then immediately retreat. That spike may be the DC H or L for weeks on D1 chart and is not an indication of true support/resistance. The spike has fouled the data..
Vincit qui se vincit.
  • #62
  • Nov 20, 2010 4:52pm Nov 20, 2010 4:52pm
Quoting vox dei
Your system's profits are very impressive. Congratulations on developing such a fine-tuned mechanical system. Just one question: are those profits before or after paying the broker?
Spreads are taken into account.



Quote
tdion

This is one position open at a time, or scaling in (and out)?

one at a time.
  • #63
  • Nov 20, 2010 4:57pm Nov 20, 2010 4:57pm
Not necessarily.

The spike can continue in the direction it started, thus balancing out cases of retracement.

Quoting Pippopotamus
idea...Price may spike enormously on surprising/unexpected news releases and then immediately retreat. That spike may be the DC H or L for weeks on D1 chart and is not an indication of true support/resistance. The spike has fouled the data..
  • #64
  • Nov 20, 2010 4:58pm Nov 20, 2010 4:58pm
Ah, Tradestar does not wish to divulge any mechanics of his system
  • #65
  • Nov 20, 2010 7:58pm Nov 20, 2010 7:58pm
Quoting tradestar1
Spreads are taken into account.
Very impressive indeed. Keep up the good work
"To hold, you must first open your hand. Let go." - Lao Tzu
  • #66
  • Nov 20, 2010 9:12pm Nov 20, 2010 9:12pm
Quoting tdion
Ah, Tradestar does not wish to divulge any mechanics of his system
No more or less than you are discussing your system. Which is not a problem, I too have put a lot of time and effort into what I have and continue to improve and evolve.
  • #67
  • Nov 21, 2010 4:17am Nov 21, 2010 4:17am
Quoting tdion
Not necessarily.

The spike can continue in the direction it started, thus balancing out cases of retracement.
,"but DB lets you know that you've truly broken a resistance level." The H/L of N bars back is not necessarily true resistance or support, but it may be.
Vincit qui se vincit.
  • #68
  • Nov 21, 2010 3:18pm Nov 21, 2010 3:18pm
Pippo:

Damn fine observation you've made. The spike would cause a bloated channel.

That's why a small lookback will pass the spike through rather quickly, which is just enough time to see if it was truly worth measuring.

-Tom
  • #69
  • Nov 24, 2010 4:18pm Nov 24, 2010 4:18pm
Quoting tdion
Pippo:

Damn fine observation you've made. The spike would cause a bloated channel.

That's why a small lookback will pass the spike through rather quickly, which is just enough time to see if it was truly worth measuring.

-Tom
you like better,...but DB lets you know that you've truly broken a resistance level, provided lookback is small enough to pass a spike through rather quickly, which is just enough time to see if it was truly worth measuring. Tom, have a cigar...
Vincit qui se vincit.
  • #70
  • Nov 27, 2010 6:52pm Nov 27, 2010 6:52pm
If you're interested I did a test on closing price breakout Donchian Channels on the EUR/USD.

There is a huge difference between time frames. On the EUR/USD from the beginning of 2000 to the end of 2009 a ten day breakout entry signal used with a five day breakout in the opposite direction as an exit signal produced a 37.56% win rate, 19053.2 pips won and 17049.0 pips lost (a 1.12 to 1 win to loss ratio). However, an eighty day breakout and a forth day exit signal produced a 65.00% win rate, 7536.3 pips won and 1768.0 pips lost (a 4.26 to 1 win to loss ratio).
  • #71
  • Nov 27, 2010 7:32pm Nov 27, 2010 7:32pm
Nice work David, thank you for the contribution.
  • #72
  • Nov 28, 2010 7:26am Nov 28, 2010 7:26am
Thanks Davidee! Great work and very interesting articles! Might I ask how the tests were done? With what software?
  • #73
  • Nov 28, 2010 11:09pm Nov 28, 2010 11:09pm
Davidee you are starting to catch onto my methods...

Definitely not exactly on target, but definitely warmer than most will ever be
  • #74
  • Nov 29, 2010 2:18am Nov 29, 2010 2:18am
One more thing I challenge any investor to do:

Forget conventional wisdom. Trading books, showing cookie cutter patterns such as trendlines, fibo sequences, and flag patterns are.... not reliable.

For every pattern shown to be success, I will produce one that shows failure.

Why is this?

Forex is not a true investment market. It is controlled by a handful of elite players. The mentality of the masses do not matter.

So, although cookie cutter may provide SOME insight into markets controlled by masses, you are better served looking at forex for what it really is: a handful of central bankers acting on behalf of their countries.

All that being said, WTF, tdion?

My only answer is this: ignore everything except momentum. THAT IS NOT TO SAY MY WAY IS THE ONLY WAY. People trade with success on several different timeframes.

The tdion way is to use Donchian breakouts to find short term momentum, and then speculate that momentum will continue. Sometimes it does, sometimes it doesn't.

Always challenge yourself for the truth. -tdion
  • #75
  • Nov 29, 2010 2:48am Nov 29, 2010 2:48am
Quoting tdion
Davidee you are starting to catch onto my methods...

Definitely not exactly on target, but definitely warmer than most will ever be
Damning with faint praise? I was surprised to see this post after Davidee shared so much more than you.
Gone to a better place
  • #76
  • Nov 29, 2010 3:04am Nov 29, 2010 3:04am
smikester, you are right. i was looking at it from my own perspective, not acknowledging that there are several ways that show profit using donchian breakouts.

and this is not MY thread... it is a general donchian channel discussion thread.

my apologies for any perceived arrogance, everyone.
  • #77
  • Edited 3:56am Nov 29, 2010 3:25am | Edited 3:56am
I have been momentum trading for quite a while now, it is really the only methodology that has consistently worked for me.

So whether you use Donchian Channels, moving averages, or price breakouts, you have to find the one that fits your personality.

All of the most successful trading methods have been based on these principles and or slight variations of them, also sound money management.


Just my two pips.

Here is a site that may be of interest to some......... Futures Truth Magazine ....... They deal primarily with Futures and stock systems. I have been asking when they are going to branch into FX.

I am not affiliated with them in any way.
  • #78
  • Dec 29, 2010 2:45pm Dec 29, 2010 2:45pm
Whilst very to new to forex, I also trade DB. With momentum, whilst there is an infinite number of possibilities, momentum always changes direction before prices!
  • #79
  • Edited 5:30am Feb 16, 2011 5:13am | Edited 5:30am
Interesting discussion going on here, kinda sad that it lost interest.

I am using donchain channels in just about every strategy that I built. Mostly for SL/TP targets, or using the pip distance between the channels and multiplying it my a fibo nr for SL/TP areas, or just using the levels as they are.

But I have never used them for entries... I guess the the mentality out there that says "sell high" and "buy low" made up my mind not to use breakouts for entries.

But will investigate this. A good risk to reward strategy can come out of this.

I see some of the breakouts have enormous momentum, meaning a tight stop loss can be set with a huge take profit. Thinking about 10 pips below the donchian channel, with a take profit of about 100 pips depending on what the market is doing.
  • #80
  • Jun 10, 2011 5:00pm Jun 10, 2011 5:00pm
Forget Price Action! Forget Candlestick Patterns! All that really matters is momentum coming off of S&R, which is best demonstrated in Donchian Breakouts! That is my opinion after 6 years of this stuff.
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