Donchian Channel

Donchian Channels plot two lines: the highest high of the last N periods and the lowest low of the last N periods. The space between is the channel. The most famous use is the 20-period Donchian Channel — buying when price breaks above the upper line and selling when it breaks below the lower line. This is the foundation of the legendary Turtle Trading system. The magic of Donchian Channels is their simplicity. There's no math beyond max() and min(). The signal is binary: new 20-day high = breakout long, new 20-day low = breakout short. It's the cleanest possible breakout system. Donchian breakouts work in trending markets and fail in choppy ones. The win rate is typically below 50%, but the winners are big enough to make the system profitable over time. It's a positive-expectancy system that requires patience and discipline.