{"id":5512,"date":"2011-01-20T01:00:50","date_gmt":"2011-01-20T05:00:50","guid":{"rendered":"http:\/\/club.ino.com\/trading\/?p=5512"},"modified":"2011-01-19T17:48:06","modified_gmt":"2011-01-19T21:48:06","slug":"the-danger-of-donchian-channels-%e2%80%93-never-swim-alone","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2011\/01\/the-danger-of-donchian-channels-%e2%80%93-never-swim-alone\/","title":{"rendered":"The Danger of Donchian Channels \u2013 Never Swim Alone"},"content":{"rendered":"

\"\"<\/a>Over the past few weeks I\u2019ve shown you video examples of how you can use three powerful, yet straightforward indicators \u2013 the Donchian Channel, Williams %R, and MarketClub\u2019s Trade Triangles \u2013 in combination to quickly find and grab some not-too-shabby profits in sideways markets.<\/p>\n

Today I\u2019d like to take a closer look at one of them \u2013 the Donchian Channel \u2013 and how misusing it could sink your trading portfolio.<\/p>\n

If you\u2019re new to trading, today\u2019s post is a must read.
\nAs I mentioned in the earlier oil video example<\/a>, the Donchian Channel is a trend tool.\u00a0 To be more specific, it is a moving average indicator that plots the highest high and lowest low over the selected time intervals \u2013 which are displayed as upper and lower channel lines on your chart.<\/p>\n

This means three very important things:<\/p>\n

First and foremost \u2013 when the price breaks above or below the Donchian it does NOT signal a reversal. This is where someone who is new to trading and unfamiliar with Donchian Channels can easily find themselves in trouble if they\u2019re not careful.\u00a0 When someone looks at a chart and sees an indicator line cross over another line or, as in this case, move outside of a range or set of boundaries, they are natural inclined to think it means a change in price direction...<\/p>\n

However, with the Donchian Channel the opposite is true \u2013 a breakout actually signals that a new trend may be establishing itself:<\/p>\n

A price breakout on the high side of the channel, it can indicate the start of a new upward trend \u2013 signaling to traders to go long and cover shorts.<\/p>\n

A price breakout out on the low side it can indicate the start of a new downward trend \u2013 signaling to traders to sell short and liquidate long positions<\/p>\n

Of course, there is just one small problem \u2013 the Donchian Channel indicator isn\u2019t always right.\u00a0 NO indicator is.\u00a0 And that, as any experienced, successful trader knows, is why basing your trading decisions on just one indicator alone is a surefire way to reach a $0 account balance in your trading portfolio in no time flat.<\/p>\n

Again, our earlier oil video<\/a> is a perfect example of this...<\/p>\n

If you had acted on the Donchian Channel breakouts alone, you would\u2019ve been on the wrong side of the move every time.<\/p>\n

If you had acted on the Williams %R indicator alone, your timing would have been off and you would\u2019ve missed out on a significant amount of profit.<\/p>\n

And, if you had acted on the Trade Triangles alone, you would have wasted time and trading fees on smaller, inconsequential trend shifts (whipsaws) that occurred between the true, money-making moves.<\/p>\n

Combine all three though and now you\u2019re cooking! You would have caught \u2013 and profited from \u2013 two explosive moves (and a potential third one) in 8 weeks without being caught up in any little whipsaws.
\nWith just a little know how and the right tools you can open up a whole new world of profits and trading success.<\/p>\n

All the best to you,
\nAdam Hewison<\/a>
\nPresident of INO.com
\nCo-founder of MarketClub<\/p>\n","protected":false},"excerpt":{"rendered":"

Over the past few weeks I\u2019ve shown you video examples of how you can use three powerful, yet straightforward indicators \u2013 the Donchian Channel, Williams %R, and MarketClub\u2019s Trade Triangles \u2013 in combination to quickly find and grab some not-too-shabby profits in sideways markets. Today I\u2019d like to take a closer look at one of […]<\/p>\n","protected":false},"author":41,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[28,3043,3628,3627,566,2809],"class_list":["post-5512","post","type-post","status-publish","format-standard","hentry","category-general","tag-crude-oil","tag-donchian-channels","tag-oil-video","tag-technical-chart-analysis","tag-trade-triangles","tag-trending"],"yoast_head":"\nThe Danger of Donchian Channels \u2013 Never Swim Alone - INO.com Trader's Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ino.com\/blog\/2011\/01\/the-danger-of-donchian-channels-\u2013-never-swim-alone\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Danger of Donchian Channels \u2013 Never Swim Alone - INO.com Trader's Blog\" \/>\n<meta property=\"og:description\" content=\"Over the past few weeks I\u2019ve shown you video examples of how you can use three powerful, yet straightforward indicators \u2013 the Donchian Channel, Williams %R, and MarketClub\u2019s Trade Triangles \u2013 in combination to quickly find and grab some not-too-shabby profits in sideways markets. 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