Donchian Breakouts [ITA]
🟠 OVERVIEW
Donchian Breakouts draws the highest high and lowest low of the last twenty bars, the channel the Turtle traders were taught to trade, and then follows every close outside it. Each break is scored on whether price kept going and on whether it fell back inside the channel first, and the result is set beside the same question asked of an ordinary bar.
Every Donchian tool draws the channel. Very few say how often the breakout ran, and almost none compare it to what any bar would have done anyway, which is the only comparison that says whether the breakout told you anything.
🟠 CONCEPTS
* The Channel - The highest high and lowest low of the bars before the current one. A channel that includes the current bar can never be closed above, because the bar's own high is part of it.
* A Break - The first close outside the channel. A run of closes outside it is one break, not several.
* Kept Going - An up break whose close some bars later is higher than the breakout close, or a down break whose later close is lower.
* Any Bar - The same question asked of every bar on the chart. This is the number a breakout has to beat.
* Fell Back Inside - Price closed back on the other side of the edge it broke, during the follow window. This is the false breakout.
🟠 HOW IT WORKS
The channel is drawn as two stepped edges with the space between them shaded. It is flat until a new extreme enters the window or an old one leaves it, and then it jumps, so it is drawn in steps rather than as a smooth line.
Each break is followed on its own for a set number of bars, ten by default. When its window ends it is scored and the count moves. A break whose window has not finished yet is left out of the rates, and every row says how many breaks it is built on.
The up-break rate turns green only when it beats the any-bar rate. The down-break rate is compared with the share of ordinary bars that fell.
🟠 SETTINGS
* Channel Length - Twenty bars by default, the Turtle entry channel.
* Bars To Follow A Break - Ten by default, two trading weeks on a daily chart.
* Shade The Channel - The band between the edges, which is the shape the chart is read by.
* Draw The Midline - Off by default.
* Edge Thickness - Thin by default, so the shaded channel is what the eye catches.
🟠 NOTES
This works on any timeframe and any symbol with a price history. The numbers belong to the symbol and timeframe on screen: on some markets breakouts run, on others most of them fall straight back, and that difference is the reason to count it rather than assume it.
A high fell-back-inside rate and a winning break rate can appear together. A breakout can dip back into the channel and still finish the window higher, and the two rows are kept apart so that is visible.
Donchian Breakouts draws the highest high and lowest low of the last twenty bars, the channel the Turtle traders were taught to trade, and then follows every close outside it. Each break is scored on whether price kept going and on whether it fell back inside the channel first, and the result is set beside the same question asked of an ordinary bar.
Every Donchian tool draws the channel. Very few say how often the breakout ran, and almost none compare it to what any bar would have done anyway, which is the only comparison that says whether the breakout told you anything.
🟠 CONCEPTS
* The Channel - The highest high and lowest low of the bars before the current one. A channel that includes the current bar can never be closed above, because the bar's own high is part of it.
* A Break - The first close outside the channel. A run of closes outside it is one break, not several.
* Kept Going - An up break whose close some bars later is higher than the breakout close, or a down break whose later close is lower.
* Any Bar - The same question asked of every bar on the chart. This is the number a breakout has to beat.
* Fell Back Inside - Price closed back on the other side of the edge it broke, during the follow window. This is the false breakout.
🟠 HOW IT WORKS
The channel is drawn as two stepped edges with the space between them shaded. It is flat until a new extreme enters the window or an old one leaves it, and then it jumps, so it is drawn in steps rather than as a smooth line.
Each break is followed on its own for a set number of bars, ten by default. When its window ends it is scored and the count moves. A break whose window has not finished yet is left out of the rates, and every row says how many breaks it is built on.
The up-break rate turns green only when it beats the any-bar rate. The down-break rate is compared with the share of ordinary bars that fell.
🟠 SETTINGS
* Channel Length - Twenty bars by default, the Turtle entry channel.
* Bars To Follow A Break - Ten by default, two trading weeks on a daily chart.
* Shade The Channel - The band between the edges, which is the shape the chart is read by.
* Draw The Midline - Off by default.
* Edge Thickness - Thin by default, so the shaded channel is what the eye catches.
🟠 NOTES
This works on any timeframe and any symbol with a price history. The numbers belong to the symbol and timeframe on screen: on some markets breakouts run, on others most of them fall straight back, and that difference is the reason to count it rather than assume it.
A high fell-back-inside rate and a winning break rate can appear together. A breakout can dip back into the channel and still finish the window higher, and the two rows are kept apart so that is visible.
Pine Script developer & trader. I build clean indicators - Smart Money Concepts, scanners, risk tools. ITAtradingtools.com
Haftungsausschluss
Die Informationen und Veröffentlichungen sind nicht als Finanz-, Anlage-, Handels- oder andere Arten von Ratschlägen oder Empfehlungen gedacht, die von TradingView bereitgestellt oder gebilligt werden, und stellen diese nicht dar. Lesen Sie mehr in den Nutzungsbedingungen.
Pine Script developer & trader. I build clean indicators - Smart Money Concepts, scanners, risk tools. ITAtradingtools.com
Haftungsausschluss
Die Informationen und Veröffentlichungen sind nicht als Finanz-, Anlage-, Handels- oder andere Arten von Ratschlägen oder Empfehlungen gedacht, die von TradingView bereitgestellt oder gebilligt werden, und stellen diese nicht dar. Lesen Sie mehr in den Nutzungsbedingungen.