Doda Donchian Indicator

The Doda Donchian Indicator for Meta Trader 4 is an indicator based on the original Donchian channels used for trading by the famed Turtles many years ago. This indication attempts to update or enhance the original indicator in order to allow for faster market entry and exits. Traders can find the indicator beneficial because it includes a lot of features for them to experiment with.

What is the Doda Donchian Indicator?

Every trader’s goal is to capture a trend as it emerges. If you can enter a trade at this point, you can catch some good moves from the trend. Another issue is determining an exit point that is neither too early nor too late for the market to eat into your winnings. The Doda Donchian comes in helpful here. The indicator assists you in determining the end of the ranging market and the beginning of the trending market. It is created by employing an exponential moving average. You can use the indicator to trade any instrument.

Setting up the Doda Donchian Indicator
Setting up the Doda Donchian Indicator

Doda Donchian Strategy

Doda Donchian is a basic yet strong technical tool. There is only one line in it. You could simply wait for a crossover of the price action and the indicator line. The good news is that the indicator provides you with an appropriate stop loss value. So, coming up with an exit strategy may be the least of your concerns. When the price passes the line from below, it may be time to buy. Ascertain if the price action is clearly in an upward trend. When the price crosses the range indicator line from above, it may be a sell signal. You may want to set the stop loss to the indicator’s recommended setting. You can set the take profit or exit at the next resistance or support level using a favorable risk reward ratio.

Buy Signal

The following could be your checklist for a buy trade:

  • When the asset is in an uptrend.
  • When price crosses above the indicator line.

Once these events occur:

  • You could open a buy position after you confirm your entry with bullish candlestick patterns.
  • You could set your stop loss just below the nearest swing low or you could use the SL given by the indicator.
  • You could set your take profit at the nearest resistance zone, or you could exit trade when price crosses below the indicator line.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
Doda Donchian Indicator Buy Signal
Doda Donchian Indicator Buy Signal

Sell Signal

The following could be your checklist for a sell trade:

  • When the asset is in a downtrend.
  • When price crosses below the indicator line.

Once these events occur:

  • You could open a sell position after you confirm your entry with bearish candlestick patterns.
  • You could set your stop loss just above the nearest swing high or you could use the SL given by the indicator.
  • You could set your take profit at the nearest support zone, or you could exit trade when price crosses above the indicator line.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
Doda Donchian Indicator Sell Signal
Doda Donchian Indicator Sell Signal

Doda Donchian Pros & Cons

Pros

  • The Doda Donchian Indicator provides signals for trade entry and also possible stop loss position.
  • This indicator can be advantageous for riding trends without exiting too quickly.

Cons

  • The Doda Donchian Indicator may not be very suitable for a sideways market.
  • This indicator may require some price action knowledge to utilize optimally.

Conclusion

Doda Donchian is a nice indicator for trend-trading which could be worth adding to your trading arsenal. It is not necessary to go through great pains to detect the indicator’s signal. You may simply wait for the price to cross below or above the indicator to sell or buy respectively. It is a straightforward but useful indication, although it does not guarantee profits.

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