Donchian Channels and the Moving Average Convergence Divergence (MACD) are two powerful technical indicators that traders often combine to identify trends, breakouts, and potential reversals in the market.
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Donchian Channels, developed by Richard Donchian, plot the highest high and lowest low over a specified period, creating a visual representation of price volatility and breakout levels. Traders frequently use the upper and lower bands to spot potential entry points—buying when the price breaks above the upper band or selling when it drops below the lower band. Meanwhile, the MACD, which consists of a MACD line, signal line, and histogram, helps confirm momentum and trend direction. When used together, these indicators can enhance the accuracy of trade signals by filtering out false breakouts.
A common strategy involves waiting for the price to break above the upper Donchian Channel while the MACD histogram is above the zero line, indicating bullish momentum. Conversely, a break below the lower Donchian Channel, accompanied by a MACD histogram below zero, may signal a short opportunity. Traders often look for confluence between the two indicators to increase the probability of a successful trade. For example, if the MACD line crosses above the signal line just as the price breaches the upper Donchian band, it reinforces the bullish case. This combination helps traders avoid entering trades solely based on price action, which can sometimes be deceptive in choppy or ranging markets.
However, like all trading strategies, using Donchian Channels and MACD requires risk management and an understanding of market context. False breakouts can still occur, especially in low-liquidity environments or during major news events. Traders often use additional filters, such as volume analysis or support/resistance levels, to further validate signals. Additionally, adjusting the lookback period on the Donchian Channels (e.g., 20-day vs. 50-day) and tweaking MACD settings (e.g., 12/26/9 vs. 5/35/5) can help adapt the strategy to different timeframes and asset classes. By combining these indicators thoughtfully and applying sound risk management, traders can develop a systematic approach to capturing trends while minimizing false signals.
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We're currently in our 12th year helping traders become successful in the live markets so we know a thing or two about leveraging a small account into serious wins.
Open Account: http://pocketoptioncapital.com
Risk Disclaimer:
Trading options involves financial risk and may not be appropriate for all investors. The information presented here is for information and educational purposes only and should not be considered an offer or solicitation to buy or sell any financial instrument on Pocket Option or elsewhere. Any trading decisions that you make are solely your responsibility.
Open Account: http://pocketoptioncapital.com
Donchian Channels, developed by Richard Donchian, plot the highest high and lowest low over a specified period, creating a visual representation of price volatility and breakout levels. Traders frequently use the upper and lower bands to spot potential entry points—buying when the price breaks above the upper band or selling when it drops below the lower band. Meanwhile, the MACD, which consists of a MACD line, signal line, and histogram, helps confirm momentum and trend direction. When used together, these indicators can enhance the accuracy of trade signals by filtering out false breakouts.
A common strategy involves waiting for the price to break above the upper Donchian Channel while the MACD histogram is above the zero line, indicating bullish momentum. Conversely, a break below the lower Donchian Channel, accompanied by a MACD histogram below zero, may signal a short opportunity. Traders often look for confluence between the two indicators to increase the probability of a successful trade. For example, if the MACD line crosses above the signal line just as the price breaches the upper Donchian band, it reinforces the bullish case. This combination helps traders avoid entering trades solely based on price action, which can sometimes be deceptive in choppy or ranging markets.
However, like all trading strategies, using Donchian Channels and MACD requires risk management and an understanding of market context. False breakouts can still occur, especially in low-liquidity environments or during major news events. Traders often use additional filters, such as volume analysis or support/resistance levels, to further validate signals. Additionally, adjusting the lookback period on the Donchian Channels (e.g., 20-day vs. 50-day) and tweaking MACD settings (e.g., 12/26/9 vs. 5/35/5) can help adapt the strategy to different timeframes and asset classes. By combining these indicators thoughtfully and applying sound risk management, traders can develop a systematic approach to capturing trends while minimizing false signals.
Open Account: http://pocketoptioncapital.com
We're currently in our 12th year helping traders become successful in the live markets so we know a thing or two about leveraging a small account into serious wins.
Open Account: http://pocketoptioncapital.com
Risk Disclaimer:
Trading options involves financial risk and may not be appropriate for all investors. The information presented here is for information and educational purposes only and should not be considered an offer or solicitation to buy or sell any financial instrument on Pocket Option or elsewhere. Any trading decisions that you make are solely your responsibility.
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LearningTranscript
00:00This guy turned $10,000 into $1.1 million in 12 months day trading and he goes by the name of
00:08Larry Williams. In this video, I'll be showing you how Larry Williams managed to turn $10,000
00:13into $1.1 million. I'll be showing you how to set his strategy up step by step and I'll be
00:20showing you how to trade his strategy effectively so that you too can become a successful binary
00:25options trader. But before we jump straight into the video, make sure you smash a like on the video
00:30and subscribe to the channel if you are new. I think we just hit 100 subscribers so thank you
00:35very much for that indeed. Other than that, let's jump straight into the video. So the first thing
00:40you're going to want to do is head over to the indicators icon right over here. In the third
00:45column to the right, fourth from top, you're going to see the Dantian channels and you're going to
00:48want to add this indicator to your chart. Now once you've added the Dantian channels indicator to your
00:53chart, it should look something like this. For those of you that do not know what the Dantian
00:57channels indicator is, I'm briefly going to explain to you what it's all about. I mean,
01:02it's pretty self-explanatory. As you can see, there's an obvious channel. Now there's far more
01:07to it. As you can see, there's an upper band, a median and a lower band. The upper band acts as a
01:12resistance level, giving us a better idea of the most recent high. The median tells us the overall
01:17trend of the market, almost acting as a moving average. Then you've got the lower band, which pretty much
01:23acts as a support level, giving us a better idea of the most recent low. So now that you know what
01:29the Dantian channel is and the basics of it, we're going to go ahead and change the settings of the
01:33indicator. So in order to change the settings of the indicator, you're going to want to click on the
01:38pencil between the eye and the cross. Here, all we're going to change is the period from 20 to 25.
01:45Once you've done that, you can click on save. Now the Dantian channel doesn't look much different
01:49than it did before, but trust me, changing the period from 20 to 25 makes a big difference.
01:55I mean, this indicator is pretty great on its own, but we're not done yet. We're going to be adding
02:01one more indicator to our chart. So in order to complete the setup of Larry Williams' strategy,
02:06we're going to be adding one more indicator to our chart. Now what you're going to want to do is head
02:10over to the indicators icon once again. In the first column, fifth from bottom, you'll find the MACD
02:16indicator and you're going to want to add it to your chart. So the reason why we added the MACD
02:21indicator to our chart is so that it provides us with more confluence when it comes to the overall
02:26trend of the market. But we're going to have to change a few things in order for the MACD to work
02:31for this strategy. Now what you're going to want to do is click on the pencil next to the X on the MACD
02:36indicator. Here you're going to want to go to styles, deselect the histogram and the signal line.
02:41All that you're going to be left with is the MACD line. Now you can head back to inputs. We're going to
02:45leave the values as is. And once you've done all that, you can click on save. Okay, so now that
02:51we have the indicator set up, I'm going to go ahead and show you guys how to trade Larry Williams'
02:55strategy effectively. So just to let you guys know, we're on the one minute time frame opening
03:00three minute positions. This strategy works for any time frame, but works best on the one minute
03:05chart. Before I get into a couple of examples, I'm just going to show you guys the basics of this
03:10strategy. Essentially, you want the price to break above the upper band for a buy position,
03:14or you want the price to break below the lower band for a sell position. Now, as you guys know,
03:19we're not going to be using the Donchian channels on its own. We also want some confluence with the
03:24MACD indicator. So for a sell position, essentially the first confirmation comes in when you see the
03:30price break below the lower band of the Donchian channel. The second confirmation comes in with the
03:35MACD. We want the MACD line to close below the zero line, which is right over here. If you guys cannot
03:40see it, I'll highlight it for you, which is in between these two lines over here. We want the
03:45MACD line to close below the zero line as our second confirmation. So in other words, if we see the price
03:51break below the lower band of the Donchian channel, we also need to see that the MACD line closes below
03:57the zero line. Once we get that correlation, once we've got those two confirmations, we know it's time
04:02to sell. Now, the same goes for buy positions. It's just the other way around. The first confirmation
04:08comes in when the price breaks above the upper band of the Donchian channel. The second confirmation
04:13comes in when the MACD line closes above the zero line. Once we've got that confirmation between the
04:18two indicators, once we've got those two confirmations, we know it's time to buy. So now
04:24that you understand the basics of this strategy, I'm going to get into a couple of examples.
04:28So here we have a good example of a potential buying opportunity. As you can see, the price breaks
04:34above the upper band of the Donchian channel, and we can also see the MACD line cross the zero line.
04:39And obviously, we're on the one minute time frame opening three minute positions.
04:44So once we see that MACD line cross the zero line, which was on this candle over here,
04:49once this candle closed, we would have opened a position over here. That's one, two, three minutes.
04:55The trade would have closed over here. That would have been a beautiful winning trade.
04:59Now, here we have an example of a trade that we would not take. As you can see,
05:03we've got the first confirmation here. The price breaks below the lower band of the Donchian channel,
05:08but there's no confirmation from the MACD indicator. So therefore, we would not take this
05:13position. I'll go ahead and give you guys one more example. Here we have a great selling opportunity.
05:18As you can see, the price breaks below the lower band of the Donchian channel,
05:22and we can also see the MACD line close below the zero line. So we'd be opening a sell position on the
05:28close of this candle over here. So that would be one, two, three minutes. The position would have
05:33closed over here. And again, that's another beautiful trade. So that's pretty much the
05:38strategy itself. Real simple to set up, real simple to follow. But this strategy is absolutely insane.
05:45I'm going to go ahead and get into a couple of live positions to show you exactly what I'm talking
05:49about to show you how damn good the strategy actually is. So sit back, relax, and enjoy.
06:19Bye.
06:49Good job.
07:19Good job.
07:49Good job.
08:20Three trades, three wins.
08:22That's how simple it is to trade this strategy.
08:25If you're patient and you stick to the rules, you'll get some pretty unbelievable trades.
08:30I completely understand why Larry Williams used this strategy.
08:34It's so simple, yet the execution is super effective.
08:38If you remain patient and consistent with this strategy, you too can make a crap ton of money.
08:44And that's what Forex is all about.
08:48Making money.
08:49Otherwise, I hope you guys enjoyed the video.
08:51I hope you found it informative.
08:53I hope you learned something new.
08:54And if you did, go ahead and smash a like on the video and subscribe to the channel if you are new.
09:00And I'll see you in the next one.