Custom Indicator for Donchian Channels!!! System Rules Included!

Mentor of mine (Mark Helweg) who ran a successful Hedge Fund, and has won several Awards for Quantatative Analysis conducted a free webinar that blew my mind. We’ve all heard most successful Traders make the most money on 5% of their trades. The reason is simple. To make BIG Money You Have to Catch BIG MOVES in the market. Do You Have A system That Get’s You In To Trades With LOW Risk, But Also Has Rules Built In To KEEP You In A WINNING TRADE? Well He Gave Me His System So I Coded It and I’m Passing Along to You….Trade Rules Will be in the First Post. INDICATOR - Donchian Channel that allows you to pick different Periods for the Upper and Lower Band. Read The First Post For an Explanation…..
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//Modified Donchonian Channel with separate adjustments for upper and lower levels
//Purpose is if you expect big move up, Use lower input example 3 or 4, and longer lower input, 40 - 100 and use lower input line as a stop out
//Opposite if you expect big move down
//Mid Line Rule in Long Example.  If lower line is below entry take partial profits at Mid Line and move stop to Break even.
//If Lower line moves above entry price before price retraces to midline use Lower line as Stop...Opposite if Shorting
//Created by user ChrisMoody 1-30-2014

study(title="CM_Donchian Channels Modified", shorttitle="CM_DC Modified", overlay=true)

length1 = input(4, minval=1, title="Upper Channel")
length2 = input(60, minval=1, title="Lower Channel")

upper = highest(length1)
lower = lowest(length2)

basis = avg(upper, lower)

l = plot(lower, style=line, linewidth=4, color=red)
u = plot(upper, style=line, linewidth=4, color=lime)

plot(basis, color=yellow, style=line, linewidth=1, title="Mid-Line Average")

fill(u, l, color=white, transp=75, title="Fill")


Interesting post on Donchian channels. I tried clicking to top right corner of chart a dozen times but nothing happens. Can you email this indicator to me or is it a paid indicator?
Btw, I tried this on Chrome and Firefox browser.
+13 Reply
First you have to have a reason you believe what your trading is about to make a potential BIG MOVE on a Daily or Weekly Time Frame. Then you need a System that will allow you to enter the trade with LOW Risk…BUT…the System has to Force you to stay in the Trade when your up a lot and want to take Profits.

***This Indicator Works on BIG Moves…It does not work on Range Bound Symbols. Indicators for Range Bound Symbols are known as Oscillators. RSI, Stochastic, CCI etc, and Upper Indicators based on Standard Deviations like Bollinger Bands.

For this Example I’ll discuss the AUDUSD on the Chart. Top Left of Chart Price went in to consolidation as most symbols do before huge moves.

#1 If your expecting the security to move down you set the value of the lower band to 4.

#2 You set the opposite band between 40 and 100, You can start with 40 and after you have locked in profit move the parameters to 60 or 100.

#3 Rule # 1 - When Price Breaks the 4 bar band you Enter. The initial Stop is 1 Tick outside the opposite band.

#4 Note*** You need Price consolidation b/c even though the opposite band was set at 60 it was close to Entry so your not risking a lot. ****You have to position size so if you get stopped out your not risking more than 1-3% of your capital. This is SO important b/c even though this chart looks great often times you take a loss or two before the trade works. Remember price is in consolidation and it’s impossible to know when it will finally BREAK.

#5 The thin yellow line on the chart is the midband. Typically when price Breaks the consolidation area for the first time it will retrace and test that area.
#6 Rule #2 - When price retraces if it does not reach the midband, and then goes below the 4 bar line add to your position and bring stop to break even. Risk Free Trade besides tying up capital.

#7 Rule #3 If on the first pull back price CLOSES above the midband close half your position limiting your risk. Big moves that are ready to MOVE typically won’t touch the midband. Note on the chart price did not reach the midband and went down over 1000 pips…then retraced to 50% level and continued down not retracing to the midband for currently 780+ pips.

#8 Rule #4 Once you’ve had a big move if price CLOSES above Midband take off half locking in Profits. Re enter if it continues in your direction when price takes out the 4 bar line.

#9 Rule #5 When price goes above the upper band CLOSE TRADE.

#10 Trade what you know…If you understand Fib Levels notice when price retraced to the 50% Fib Level the lower 4 bar line and the upper 60 bar line were CLOSE TOGETHER so when price rejected the 50% Fib Level and took out the 4 bar line you once again had a LOW RISK Entry and would currently be up 780 pips. With profit taken at 950 pips that 1600 pips of profit.

#11 Statistics show when you hunt these big moves the ones you catch only equal about 5% of trades of GREAT Traders. But that 5% makes more than the other 95% of their Trades combined.

Enjoy the indicator and directions are on the chart in the white box on how to get the code….

Check out AAPL on a daily chart with 4 bar on lower band, FB with 4 Bar on Upper Band, TSLA with 4 bar on upper band, GOOG with 4 Bar on upper band….****Easier to use on Stocks b/c you constantly hear about Stocks that MOVING.

Last TIP*** Chuck Hughes has won the World Trading Championship around 7 times and come in 2nd several other times. Use his method. If the 50 EMA is above the 100EMA (On Dow, S&P, NasDaq) search the 52 week high list.

If the 50 EMA is below the 100EMA search the 52 week low list.
+9 Reply
grt indi...can u add a buy sell signal to it pls?????for the highest and the lowest point? that moment?
hi how can i download the indicator? thanks
Hi Chris
Pardon, this is not a comment, but maybe you can help me.
I am from South Africa, and wonder if you can tell me where to find the Donchian Channels with the midline (tree lines - top, bottom and the middle line). So far I could find only the two line Donchian channel. I will appreciate it if you can fill me in on where to get it.
Kind regards
Julius Burmeister
ChrisMoody juliusmaatjie
Not 100% sure what you are asking. If you are asking me how to import this custom code I just recorded a video on how to import's the first video on this page...
ChrisMoody ChrisMoody
f your looking for a regular Donch Channel indicator with midline...then just make sure the values are set to the same for the look back period for both the Donch High and Low lines
juliusmaatjie ChrisMoody
Hi Chris
Thanks for your quick reply. I appreciate it.
I use the MT4 charts and already add the Donchian Channels in the Navigator (indicators) section. But this is the 2 line (top and Bottom) Donchian Channels. I would prefer the three line Donchian Channel. Do you know where I can get one to add to the MT4. I don't know how to add a snip of the donchian to this reply. One see them on Youtube . Refer to the insert for a video.
ChrisMoody juliusmaatjie
Just posted V2 of the Indicator...

+3 Reply
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