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Donchian Channels (DON)

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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.


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

Donchian Channel Example 


To open the Donchian Channel Preferences click on the QuickLink (DON) in the lower right of the chart. Or you can right click, select Overlay Properties and then Donchian Channels. If you click on the chart, the Preferences tab will go back to chart settings.

1. 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.

2. Donchian Period: Specify the number of bars in a period. 

3. Upper, Lower: Choose the color, line style, and line thickness of your indicator line. Upper is the line formed by the highest high in the period specified. Lower is the line formed by the lowest low in the period specified.

4. Mean Line:  Graph a line that is the midpoint between the upper and lower.