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Donchian Channel Definition


JerryS
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The channel currently uses data from the current day in its construction.  QT did the same.

That is not standard in the industry.  The standard is to use previous and earlier days, not the last day.

I verified this with Think or Swim, StockCharts.com, E*Signal, and other charting programs.

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Sorry for not being more specific ...

You, and others, call it a Price Channel, but Donchian popularized that specific type of channel (that resets every n days to historical highs and lows, where n is any user choice, and the channel is horizontal except where it ramps to a new value on a following day per the value of n).

So it is often named for him to give him some respect for what he did, plus to help differentiate it from other types of price channels which have other differentiating characteristics (which usually results in continuous straight lines that usually have a slope, as opposed to always being horizontal).

All of those Donchian-like channels use previous Highs and Lows to set the boundaries, and not current day values.

I checked the programs mentioned, and took votes of other traders, and it is unanimous that current prices are not used when drawing the type of channel that both QT and MT, and even StockCharts.com, calls "Price Channels".

Here is another reference:  https://en.wikipedia.org/wiki/Donchian_channel

StockCharts.com:  http://tinyurl.com/z69qxgx

Edited by JerryS
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From your wikipedia link:

"The Donchian channel is an indicator used in market trading developed by Richard Donchian. It is formed by taking the highest high and the lowest low of the last n periods. The area between the high and the low is the channel for the period chosen. "

When someone says "last n periods" that *usually* includes the current one. Thus my confusion. The stockcharts link does show, on the charts, that it is not including current one. It also says (and I guess I missed that before) "The Price Channel formula does not include the most recent period."

Thanks for the correction.

I will change the code. Will be in next beta.

(By the way, we do credit Donchian in the desciption (the little info button) of the indicator).

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