Donchian Channels (DON)

Donchian Channels were created by Richard Donchian, an expert in trends. The DON is a simple trend breakout system. The channel works well in trending markets, but not as well in sideways moving markets.

Donchian Channels measure volatility by creating two bands based on the highest high and lowest low for a specified period. Many traders view the market crossing above the upper band as a signal to buy and the market crossing below the lower band as a signal to sell.

Calculation

The calculation of the DON is here:

Donchian Channel High = MAX (HI, n)
Donchian Channel Low = MAX (LO, n)

n: The number of periods you select.

Example of Donchian Channels

Preferences

Right-click anywhere on the chart and go to "Overlay Properties." Select Donchian Channels from the list. The preferences will appear in the Control Panel. (Once you click on the chart, the Preference tab will go back to chart settings.)

Restore Settings: TNT Default will change your settings back to the original software settings. My Default will change current settings to your personalized default settings. Apply To All Charts will apply your selected settings on all open charts. Save As My Default will save your current personal settings.

Donchian Period: Specify the number of days in a period. To add an offset, add a second number in the upper period box (with only a space between the two numbers.) *Please note, Donchian channels are most commonly used with the same period for both upper and lower channels.

Upper, Lower: Choose the color, line style, and line thickness of your indicator line.