The above is the price chart of the Gold futures contract overlaid with the Donchian Channel.The top, upper line in red, is the highest price in the previous 50 trading days. The lower line in blue represents the lowest point price has reached in the last 50 trading days. The light gray line in the middle is the mid-point between the upper and lower.
– Choose the time period (N).– Compare high and low prints for each day over that period.– Subtract the highest high print from the lowest low print and divide by 2.– Plot the result.
– Choose the time period (N).– Compare high and low prints for each day over that period.– Subtract the highest high print from the lowest low print and divide by 2.– Plot the result.
Strategy 2: Protective StopThe second tactic the swing trader can take is to use a protective stoploss.A protective stop-loss order will be entered simultaneously as the opening trade to buy or sell.
Strategy 3: Counter-TrendIn contrast to the above two strategies, strategy 3 tells the trader to be short when the Donchian Channel signals long. Conversely, when the Donchian Channel tells the trader to sell, he will do the opposite and buy.