The objective of any trader is to spot trends as they develop. If you are able to get into an investment at this time, it is possible to follow the trend until you are profitable. However, another challenge is choosing the right exit time that is not premature or too late to allow the market to take your earnings. This is the place where Doda Donchian comes in handy. Doda Donchian comes in handy.
The indicator assists you in determining the conclusion of the market that is ranging and the beginning of the market that is trending. It is constructed by making use of an exponentially moving average. The indicator can be used to trade any instrument, and it performs well in a longer time frame that is higher than H4.
How to Use the Indicator to Trade
Doda Donchian is among the most basic yet effective technological tools available. It’s only one line. All you need to do is wait for a cross-over between the price movement and the line of the indicator. The good thing is that this indicator provides you with a stop-loss amount. Thus, formulating an exit strategy will be one of the simplest tasks.
Buy Signal
Purchase when the price is crossing that line below. Make sure the price is on a clear upward trend.
Sell Signal
The signal for selling occurs when the price exceeds the range indicator line from above.
Exit Strategy
The stop loss should be set to the level specified in the indicators. You can utilize the 1:3 risk-reward ratio to determine the take-profit and take-profit at the next level of resistance or support.
Trading Example
Note how the price continues to sustain downwards as it crosses beneath that indicator line.
Conclusion
Doda Donchian is an excellent indicator to use in trend trading. You don’t need to travel far to find the signal of the indicator. Simply wait for the price to be below the line of the indicator to sell or go above it to purchase. It’s a simple, but useful, indicator.
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