Doda Donchian Indicator

Doda Donchian Indicator

Doda Donchian is an excellent indicator for detecting trends and setting exit levels. Free download.

The goal of every trader is to catch a trend as it forms. If you manage to enter a trade at this point, you can ride the trend to profitability. But another headache is to choose an exit point that is neither premature nor too late for the market to eat into your profits. This is where the Doda Donchian comes in handy.

The indicator helps you identify the end of the ranging market and the start of the trending market. It is developed by using an exponential moving average. You can use the indicator to trade any instruments, and it works well in a higher time frame above H4.

How to Use the Indicator to Trade
Doda Donchian is one of the simplest yet powerful technical tools to use. It only consists of only one line. You simply want to wait for a crossover between the price action and the indicator line. The good news is that the indicator gives you a suitable stop loss value. So devising an exit strategy should be the least of your worries.

Buy Signal
Buy when the price crosses the line from below. Ensure the price action is on a clear uptrend.

Sell Signal
A sell signal occurs when the price crosses the range indicator line from above.

Exit Strategy
Set the stop loss at the value provided by the indicator. You can use the 1:3 risk reward ratio to set the take profit or exit at the next resistance or support level.

Trading Example

The price action of EURUSD illustrates the Doda Donchian indicator in action. Notice how the price sustains a downward movement after the price crosses below the indicator line.

Conclusion
Doda Donchian is a good indicator for use in trend trading. You don’t have to go long lengths to identify the indicator signal. You simply wait for the price to cross below the indicator to sell or above the line to buy. It is a simple but helpful indicator.