Combining Donchian Channels, the Accelerator Oscillator (AC), and the Awesome Oscillator (AO) creates a powerful multi-layered trading strategy that captures momentum shifts, trend strength, and breakout opportunities.
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Donchian Channels help traders visualize price breakouts by plotting the highest high and lowest low over a set period, making it easy to identify when price escapes consolidation. When price breaks above the upper Donchian band, it's often a signal that bullish momentum is building — but confirmation is key. That’s where the oscillators come in.
The Awesome Oscillator, developed by Bill Williams, measures market momentum by calculating the difference between a 34-period and 5-period simple moving average (SMA) — both plotted over the median price. When AO crosses above zero with increasing green bars, it signals that momentum is turning bullish. The Accelerator Oscillator, also by Williams, goes a step further by measuring the acceleration or deceleration of this momentum. If both AO and AC are green and rising while the price breaks out of the Donchian Channel, this convergence provides a triple confirmation of trend continuation with strong momentum backing.
Conversely, if price breaks below the lower Donchian Channel and both the AO and AC flash red bars, it can be a high-probability short setup. The key advantage of this trio lies in the timing precision — Donchian shows when a move might be starting, while AO and AC confirm how strong the move is. By only acting when all three tools align, traders can filter out noise and fakeouts. However, in ranging or sideways markets, this system may produce whipsaws, so pairing it with a volatility filter or multi-timeframe confirmation can further enhance its accuracy.
Money Management: It is important to follow up with this strict rule of investment: If you have $100 in your account, each open position should be $5 tops If you have $200 in your account, each open position should be $10 tops If you have $500 in your account, each open position should be $25 tops If you have $1,000 in your account, each open position should be $50 tops If you have $2,000 in your account, each open position should be $100 tops If you have $5,000 in your account, each open position should be $250 tops
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.
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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.
