Donchian breakout
Worked example: 20-bar Donchian close breakout. Freeze these rules before replay, then record every eligible signal—including the ones you skip.
- CHART
- H4
- CLOCK
- UTC
- DECISION
- Completed candles only
Build the same chart
Market scope
- EUR/USD, GBP/USD, USD/JPY and AUD/USD; H4 UTC candles; both directions.
- Signals are computed from completed bars only and the current signal bar is excluded from the 20-bar channel.
- One position per pair; no pyramiding in this canonical demo.
Settings
- Plot a Donchian upper/lower channel from the highest high and lowest low of the preceding 20 completed H4 bars, excluding the current bar.
- Plot a separate 10-bar opposite-side exit channel, also excluding the current bar, and Wilder ATR(20).
- Load at least 60 bars before the first signal and mark the channel values before revealing the signal close.
Check eligibility first
- The 20-bar channel width must be at least 2.0 × ATR(20).
- No position may already be open in the pair and aggregate demo risk across all breakout positions must remain at or below 1.50% of equity.
- Both long and short breaks are eligible; there is no discretionary trend filter.
Wait for the close
A completed H4 candle closes above the highest high of the preceding 20 completed bars, excluding the signal bar. The 20-bar channel width is at least 2.0 × ATR(20). Enter at the next H4 open.
A completed H4 candle closes below the lowest low of the preceding 20 completed bars, excluding the signal bar. The 20-bar channel width is at least 2.0 × ATR(20). Enter at the next H4 open.
Stop and invalidation
Initial stop is 2.0 × ATR(20) from the actual fill. Size to risk 0.50% of equity, rounded down to 0.01 lot; never add to or widen the position.
Never widen the stop to keep a losing idea alive. Recalculate size from the actual entry-to-stop distance before entry.
No-trade filters
- Fewer than 60 warm-up bars are available or the channel includes the current signal bar.
- The 20-bar channel width is below 2.0 × ATR(20).
- A position is already open in the pair or total breakout-position risk would exceed 1.50% of equity.
- The next-open gap exceeds 1.0 × ATR(20).
Choose before entry
This card's fixed method
Exit at the next H4 open after a completed close through the opposite 10-bar channel. The initial 2 ATR stop remains active until that exit.
Test separately—never mix mid-trade
- Separate variant only: 55-bar entry and 20-bar exit.
- Separate variant only: stop-entry at the channel rather than next-open entry.
- Separate variant only: pyramiding at fixed 0.5 ATR intervals with a hard portfolio-heat cap.
Match the setup
Open a H4 chart and add Donchian(20), Donchian(10), ATR(20) from Insert or Navigator with the exact inputs above. Draw required price levels before the reaction and check external filters separately. MT4 and MT5 candles use broker-server time, so verify that their H4 bar boundaries match this card's UTC candles before comparing results.
Open a H4 chart and add Donchian(20), Donchian(10), ATR(20) from Insert > Indicators or Navigator. Match applied price and Wilder periods, then make decisions from completed candles only. MT4 and MT5 candles use broker-server time, so verify that their H4 bar boundaries match this card's UTC candles before comparing results.
Set the chart to H4, add Donchian(20), Donchian(10), ATR(20), and match the feed and inputs. Display UTC and confirm that the selected feed uses the same H4 bar boundaries. In Bar Replay, write the decision before advancing.
Before placing a demo trade
Frozen replay costs
Use a constant 1.2-pip spread, 0.2-pip adverse slippage on both entry and exit, zero commission, and a frozen 0.5-pip cost per daily rollover.
Practice template only—not a live trade signal or proof the method works. Test plenty of charts, including signals you skip.
Guided practice: https://wickatlas.com/tools/forex-trading-simulator?strategy=donchian-breakout&coach=1&preset=trend-side-atr-breakout-stop#guided-replay