Professional traders know that trading is simple; your success depends on selling at the market’s high and buying at the market low. Whether you try to sell high and buy low or buy low and sell high, efficiently doing that is the key to achieving long-term success in the forex market. Today, there are various tools to use to achieve that. However, it is the Donchian channel MT4 that can help traders in a better way.
Getting the best out of your forex trading activity is unnegotiable if you want to succeed. To do that, you need to follow or use the right strategy. However, after trading for over four years, some haven’t found the “light.” In this article, you will learn about the Donchian channel MT4 and the fundamental tips to buy and sell at the low and high, respectively.
The Donchian Channel MT4 – What is it?
If you are new to trading, traders use the best metatrader indicators to analyze the market; these indicators are mostly used by technical and price action traders. An indicator is a tool that helps you predict the direction of the market. Today, we have different kinds of indicators mainly used for various purposes. These indicators include volume indicator, MACD, etc.
Richard Donchian is a famous trader for developing the indicator. The indicator has two lines, which is the lower support line and the upper resistance line. These lines represent the low and high prices of the last period. Compared to other technical indicators, the Donchian channel Indicator is quite simple to use.
Generally, the Donchian channel indicator acts as a combination of the Bollinger Bands and moving averages. The feature of the Bollinger Bands is to create support and resistance level using the upper and lower bands, whereas the moving averages put the previous period into consideration.
A simple but effective indicator
Most traders neglect to use the Donchain channel because of its simplicity. However, its effectiveness as an indicator to help get support and resistance lines is undoubtedly priceless. Don’t get confused because some version tends to draw three lines inside of the two lines.
Nevertheless, the most important of these lines are the upper and lower lines, which are based on the lower support and higher resistance line of the recent low and high periods of your choice. The default setting for the period is 20-periods; you can change it to suit whatever strategy you decide to use.
How to Install the Donchian Channel Indicator
Although the indicator is a popular tool that most traders are conversant with, it is not among the standard indicators you find in your MetaTrader 4. Nevertheless, to use it, you have to download it before placing on your chart. One of the primary reasons for it not included among the standard indicators is the idea that it might not generate accurate signals. The other reason may not be unconnected to the fact that it slows down the MetaTrader 4 platform.
You have to download the Donchian channel indicator from the MetaTrader community. Once you have downloaded it, locate the file on your computer and copy it to your MT4 folder. Here is how to do that.
On the MetaTrader 4 platform, select “File,” then click the “Open Data Folder.” You have to open the “MQL4” folder and open the “Indicators” folder. Then paste the file you downloaded file and restart your MetaTrader 4. You will see the Donchian channel indicator on your “Navigator,” which you can then place on your chart.
Buying and Selling – When is the right time?
In the business world, time is everything. Striking a deal at the wrong time can be regrettable for years to come. Forex trading operates similarly; you must trade the pairs at the right time; you must buy or sell when it is best suitable.
However, for most traders finding the perfect entry point is the worst nightmare of their life. It is understandable because it can get complex depending on what strategy you decide to use.
Nevertheless, you can smile your way to the bank because there are time tested methods to rip the market of what belongs to you – yes the monies in the market belongs to you if you abide by the rules. Here are a few ways to get at the better end of the market.
Follow the Trend
Understanding the market structure is one priceless gift you can give yourself. The market experience period of trends, which can be big based on the direction you decide to trade. Traders use tools such as moving averages, Fibonacci retracements, the Donchian channel MT4, momentum oscillators to hop into a predominant trend.
The reversal is opposite to the trend strategy. The forex market doesn’t go in one direction all the time; it tends to reverse or retrace itself before changing the direction. Traders take advantage of these reversal periods to go long or short. These traders use moving average crossover, candlestick patterns, and stochastics to trade reversals.
There are times when the market is “silent.” You can also call such period, times of consolidation; buyers and sellings are not taking any decision on the current market. Most traders find the market boring because there is no struggle or noise.
You can use these three ways to enter the market. The objective is to buy when the market is low, and sell when the price is at its highest point. However, to do this, you have to be disciplined and consistent. Additionally, your decision-making ability has to be top-notch because of how volatile the market can be at times. You can gain steadily from a trending, ranging and reversing market.
Closing Remarks on the Donchian channel MT4
Now you know that the Donchian channel MT4 is a simple indicator that plots the lowest low and highest high over a particular period, everything now lies in you using it properly. The Donchian Channel can help you identify when the price of an asset is about to breakout or to go along with the trend of the market. Since the indicator tends to generate false signals, you hardly find it on your MetaTrader 4 platform; hence, you have to install it to use it.
While the forex market has numerous tools to use when trading, not all of these tools are effective in predicting in the market. To help traders, we have developed reliable indicators and tools that can take your trading to the next level.
Importantly, these indicators and tools have undergone a series of backtesting to generate the right signal when trading, so check them out here. So there you have it all to help you improve your trading.