[blackcat] L1 Stella Osoba Donchian Channels

2023年8月2日

Level 1

Background

On Jul, 2023, Stella Osoba proposed a price channel idea in the article of “Using Price Channels”.

Function

In Stella Osoba's article "Using Price Channels" in the 2023 bonus issue, author Stella Osoba describes why many analysis techniques are based on the concept of price channels. In her explanation of the Donchian channels, she explains that they are used to identify the trend and that the prices for the last period are not included in the calculations. I rewrote this idea in the PINE version presented here, allowing the user to optionally include the most recent period. To not include the most recent period, set the IncludeRecentPeriod input to false.

Richard Donchian, a futures trader, created the Donchian Channel as a trend indicator. He was later dubbed the "father of trend following." Several trading methods based on Donchian channels have been established, but day traders can create their own as the indicator is versatile and can be interpreted in different ways. The renowned Turtle Traders also used a variation of the Donchian technique.

The Donchian Channel draws a line between the high and low price of an asset over a period of time, generally using candlesticks as a clock. Candlesticks are chart areas on charts that show the open, high, low, and close price and time frame of a particular stock. They owe their name to their shape. When the indicator is applied to a chart, the lines form a channel around the current price.

When day trading, Donchian channels are useful for highlighting trends and range periods. A third line can be added between the top and bottom lines if required. The upper and lower channel lines are averaged to form this center band. The indicator can be used on all timeframes, including one-minute and five-minute charts (where a bar forms every one or five minutes), and it can be used for forex, stock, futures, and options trading .


Remarks

Feedbacks are appreciated.

4月23日

版本注释

OVERVIEW
The [blackcat] L1 Stella Osoba Donchian Channels indicator is designed to help traders identify key support and resistance levels using Donchian Channels. Based on the principles outlined by Richard Donchian and presented by Stella Osoba, this indicator plots upper, lower, and optional middle channels to provide a clear view of market volatility and potential breakout points. It also generates buy and sell signals when specific conditions are met, aiding in timely decision-making 📈💹.

FEATURES

Calculates and plots Donchian Channels:
Upper Channel: Representing recent highs over a specified period.
Lower Channel: Representing recent lows over a specified period.
Optional Middle Line: Average of the upper and lower channels.
Includes customizable inputs for channel calculation:
Length Period: Number of bars considered for calculating channels.
Include Recent Period: Option to include the most recent bar in calculations.
Include Middle Line: Option to display the average line between upper and lower channels.
Generates buy ('BUY') and sell ('SELL') labels on the chart for quick identification 🏷️
Provides alerts based on price crossings relative to the Donchian Channels 🔔
HOW TO USE

Add the indicator to your TradingView chart by selecting it from the indicators list.
Adjust the following parameters as needed:
Length Period: Set the number of bars for channel calculation.
Include Recent Period: Enable/disable inclusion of the most recent bar.
Include Middle Line: Enable/disable the display of the middle line.
Monitor the chart for buy and sell labels indicating potential trade opportunities.
Set up alerts based on the generated signals to receive notifications when conditions are met 📲.
Use the channels as dynamic support and resistance levels for better context.
LIMITATIONS

The indicator relies heavily on historical price action, which might not capture all future movements.
False signals can occur in highly volatile or ranging markets 🌪️.
Users should always confirm signals with other forms of analysis before making trading decisions.
NOTES

Ensure that you have sufficient historical data available for accurate channel calculations.
Test the indicator thoroughly on demo accounts before applying it to live trading 🔍.
Customize the appearance and parameters as needed to fit your trading strategy.
<b]THANKS

Special thanks to Stella Osoba for presenting the concepts behind this indicator and to Richard Donchian for developing the original idea 🤝.