Donchian Channel Breakout Forex Trading Strategy

The market will bounce along known trading zones and such motions are what trader’s eye in a bid to make profits.

You don’t necessarily have to sit in front of your screen all day waiting for the market to bounce in your direction or against it to enter or exit a trade respectively.

To be able to successfully navigate the forex market, you’ll need to select your trading weapons carefully, as this will enable understand price action more vividly.

The Donchian Channel Breakout forex trading strategy is designed to provide you with some nice buy and sell trading zones breakout signals.

Chart Setup

MetaTrader4 Indicators: Limiteddonchianchanel.ex4 (Inputs Variable Modified; periods=50, distance=800), lukas1_Arrows_Curves.ex4 (Inputs Variable Modified; SSP=14)

Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, 1-Day

Recommended Trading Sessions: Any

Currency Pairs: Any pair

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Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Initiate a buy entry if the following indicator or chart pattern gets displayed:

  1. If the blue upward pointing arrow of the lukas1_Arrows_Curves custom MT4 indicator gets placed fairly below the candlesticks as seen on Fig. 1.0, price is said to be pushed to the upside i.e. a trigger to buy the designated currency pair.
  2. If price close above the middle dark khaki line, while trading along the upper outer green line of the Limiteddonchianchanel custom indicator, as seen on Fig. 1.0, the prevalent sentiment is said to be bullish, as such a buy signal will suffice.

Stop Loss for Buy Entry: Place stop loss 1-3 pips below trading support.

Exit Strategy/Take Profit for Buy Entry            

Exit or take profit if the following rules or conditions holds sway:

  1. If the lukas1_Arrows_Curves custom MT4 indicator displays a red downward pointing arrow that is aligned above price bars as depicted on Fig. 1.0, more bulls are said to be exiting their positions i.e. an exit or take profit will do.
  2. If while a bullish trend is ongoing, price closes below the dark khaki middle line of the Limiteddonchianchanel custom indicator, it is an indication to exit or take profit without delay.

Sell Entry Rules

Initiate a sell entry if the following holds preference:

  1. If the red downward pointing arrow of the lukas1_Arrows_Curves custom MT4 indicator gets placed slightly above price bars as shown on Fig. 1.1, price is said to be pushed to the downside i.e. a trigger to sell the selected forex pair.
  2. If price closes below the middle dark khaki line, while trading along the lower outer red line of the Limiteddonchianchanel custom indicator, as illustrated on Fig. 1.1, the prevalent market sentiment is said to be bearish, hence a sell alert will do.

Stop Loss for Sell Entry: Place stop loss 1-3 pips above trading resistance.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following takes center stage:

  1. If the lukas1_Arrows_Curves custom MT4 indicator pops up a blue upward pointing arrow that is placed below price bars, more bears are said to be closing their orders i.e. an exit or take profit is advised.
  2. If while a sell signal is running, price closes above the dark khaki middle line of the Limiteddonchianchanel custom indicator (refer to Fig. 1.1), an exit or take profit is duly recommended.

Sell Trade Example

Fig. 1.1

Free Download

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About The Trading Indicators

The Limiteddonchianchanel.ex4 indicator for MetaTrader4 is an enhanced Donchian Channel deployed to spot price breakouts below or above recent price history.

The lukas1_Arrows_Curves.ex4 is a custom indicator that displays a band around price, with arrows (blue and red) used in denoting market trends (bullish and bearish).

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Combines Price Action And Market Volatility To Help You Identify Profitable Entries And Exits Quickly and Accurately.



  • Up To 100 Pips Per Trade With Low Risk
  • Includes Entry, Stop-Loss And Take Profit Rules
  • Learn And Trade This Strategy In only 10 Minutes