Donchian Bands is a forex trading system. Donchian bands is composed of only one indicator which makes the system really simple and easy to trade. The system is named Donchian bands because it consists of three bands. The Donchianbands looks very similar to Bollinger bands. Price fluctuates within the range of these Donchain bands. The top band works as a resistance level and that can be used for shorting the pair while the bottom band works as a support level and that can be used for longing the pair. The mid bands of Donchain bands work as a mid line that separates the world of buyers and sellers. Although the system is very simple and easy to understand it takes sometime to master it. You should have the patient and the discipline to master any system. At the beginning it might be hard to put yourself in to the rules of the system but as you practice, gradually you will master it.
Donchian bands can be used to trade in any time frames with any currency pairs. But it is recommended that you trade those currency pairs which have fewer spreads when you trade in smaller time frames. You should also be careful where there are high impact news coming if you are trading in smaller time frames because during the high impact events the technical tools are less likely to work as the market is driven by specific news rather than by the supply and demand forces.
When the Donchain Bands system is correctly loaded on your trading platform your chart should look like this:
- Donchian Bands
As it is already explained about the donchian bands above it might not be necessary to explain about this indicator here.
Buying Conditions Using Donchian Bands.
- Price should touch the top band of the Donchian bands indicator.
- Enter long as soon as price trends higher by touching the top band.
- Place your stop just below the recent swing low.
- Take your profits when the price deviates and falls from the top band.
Selling Conditions Using Donchian Bands.
- Price should touch the bottom band of the Donchian bands indicator.
- Enter short as soon as price trends lower by touching the bottom band.
- Place your stop just abovethe recent swing high.
- Take your profits when the price deviates and rises from the bottom band.
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