Donchian Channels and the DeMarker indicator are valuable tools in technical analysis, often used together to refine trading strategies. Donchian Channels, developed by Richard Donchian, plot the highest high and lowest low over a selected period, typically 20 days, creating an upper and lower band with a middle line often representing the average.
Open Account: http://pocketoptioncapital.com
Traders use breakouts above or below the channel to signal potential entry or exit points. A price closing above the upper band might indicate a bullish breakout, suggesting a buying opportunity, while a close below the lower band may signal bearish momentum and a possible short position.
The DeMarker indicator, created by Tom DeMark, is an oscillator that compares the most recent high and low prices to previous periods to gauge buying or selling pressure. It ranges between 0 and 1, with levels above 0.7 indicating overbought conditions and below 0.3 suggesting oversold conditions. This makes the DeMarker indicator particularly useful for identifying potential reversals or market exhaustion, especially when price action appears extended. When combined with Donchian Channels, traders can avoid false breakouts by using the DeMarker to confirm the strength or weakness of a move.
Integrating both indicators provides a more robust trading system. For example, if the price breaks above the Donchian Channel while the DeMarker is not yet in overbought territory, the breakout may have room to run, offering a better risk-reward setup. Conversely, a breakout that coincides with an overbought DeMarker reading might warrant caution or a tighter stop loss. This layered approach allows traders to filter entries and exits with greater precision, reducing exposure to false signals and improving overall strategy effectiveness.
Learn how to day trade. This video is dedicated to 'everyday' folks starting out with a smaller account - think $1000 or less. Like starting any career, there is a lot to learn when you're a day trading beginner. Here are some tips to steer you in the right direction as you start your journey. These tips will get you setup with the proper indicators and settings and strategy, help you decide what to trade and when to trade, show you how much capital you need, how to manage risk, and how to practice a day trading strategy effectively.
We're currently in our 13th 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. Any trading decisions that you make are solely your responsibility. Past performance is not necessarily indicative of future results.
00:01This 5 second strategy has been giving me a very good win ratio for a long time, so I thought of sharing it with you too.
00:15The strategy is very simple, even new traders can use it easily, just understand this trick once.
00:23So first of all I will show you in brief how to set up the indicators.
00:28So first of all set the timing of the candle to 5 seconds. Because in today's strategy this timing shows the best performance.
00:38After that set the expiry timing to 5 seconds as well. In this strategy, 5 second candle and 5 second expiry timing is a good combination, and today we will set the trade amount to $160.
00:51And today we will place many entries and see what win ratio this strategy gives today, so now we have to go to the settings of the indicators.
01:00And add the Donchian channel.
01:03And also add the demarker indicator.
01:06Today we will try to make profits with the help of a combination of these two indicators, but first of all we have to make some changes in the settings of both of them, so first of all go to the settings of Donchian channel. And set the period settings to 5. After that I am going to make some changes in the colors too. If you like it then you can do it too.
01:29And then save it.
01:31After this we have to make changes in the settings of the demarker indicators. Like here set the period to 7, there is no need to make much changes in its color settings, and then save it too, and here all our indicators are set.
01:45Now we add some currency pairs, and then we will start looking for entry points properly. I will add all the OTC currencies here. Because I get more facilities in this.
02:01So here I have got a very good chart. We need only two confirmations to place an entry, now let us talk about this chart, like in this chart we got the first confirmation when the market reached the lower channel of a Donchian channel.
02:15Now we will wait for the second confirmation, and the second confirmation we will get from this green line of the demarker indicator. When this green line crosses this red line and starts going up, then we will place an entry in the upward direction. So now we will wait for the cross to happen here.
02:36So you can see that after this green moving average line crossed this red line in the upward direction, I have plans to double entry here. This is a good confirmation.
02:54And great, our entry here has won. In this strategy, the demarker indicator plays a bigger role than the Donchian channel, but this does not mean that the Donchian channel is not very important. The Donchian channel also helps us a lot in this, you will know more later.
03:10So here the market has touched the upper line of the Bollinger Bands and has come to the lower line. But the moving average line in the demarker indicator has just crossed this green line in the downward direction, so we can still place an entry here.
03:30And great, we won this entry too, you should understand each entry carefully, because you will get to understand some important things in different trades.
03:40So here also the market is now moving downwards from the upper line of the Donchian channel. So when this MA line crosses this green line in the downward direction, then we will place an entry in the downward direction.
03:58So here after the MA line crossed the red line I placed a double entry in the downward direction. And the entry won, it was very good, now we look for the next chart where we can get the best entry.
04:13So here the market is moving from the lower line in the upward direction. And in the demarker indicator the MA line is also crossing the red line in the upward direction.
04:27And very good, here also the entry has won easily. Now we look for the next chart where we can get the right entry point.
04:41So here also the market is moving in the upper channel. When it starts going down, and at the same time the MA line crosses the green line in the downward direction, we will immediately place an entry in the downward direction.
05:00So after making the cross I immediately placed the entry. And our entry here won. I just place the entry on the symbol chart where I think the entry here has a higher chance of winning.
05:19So here the market is moving on the lower line. And the MA line is also moving below the red line. So we will wait a little, so that the MA line crosses this red line and comes up.
05:39And very good.
05:46We have placed many entries so far. And we will place some more entries. So we again look for a chart with a simple and good entry point.
05:55So here also the market is moving on the upper line. So when it starts moving in the downward direction by forming a red candle, then we will think about placing an entry, and at the same time the MA line of the demarker is also moving above the green line. So we will wait until we get a signal in the downward direction from the demarker.
06:17.
06:25So unfortunately our entry has lost here, so sometimes even after placing the entry correctly, the entry loses. This can also happen due to change in market trend, but we should be prepared in such a situation.
06:40So here also the market is going down after touching the upper line, now we will wait till the MA line and the demarker indicator crosses the green line in the downward direction.
06:54So here the market has gone up instead of going down. And the demarker indicator also did not give any signal in the downward direction. So let us move on to another chart.
07:08.
07:09So here too I think there can be a good entry.
07:19.
07:20Unfortunately, our entry has lost here too. Now we will need a triple entry to recover it. So for this we look for a good chart.
07:30.
07:31So here I got a good chart. And I think the chances of winning the entry here are very high.
07:37.
07:39And here our entry has won. And I think maybe we have recovered the loss, so if we get the right entry point in the market, then we will try to earn some more profits.
07:49.
07:50If you want the right entry point, then do not hurry while placing the entry. Let all the indicators we have added provide signals properly. And only after that place the entry with the right analysis. This can bring a lot of change in your trading journey.
08:05.
08:06Right now we haven't received any good signals from both the indicators, so we will wait for some time in this chart, so that we can get the right entry point to place the entry.
08:22.
08:23.
08:24And it is great that we have won this entry too. We have made good profits today. If we get the right entry points in the market, then we will place two or three more entries, and after that today's trading session will close here.
