Donchian Breakout (20)
BullishContinuationBeginnerA close above the highest close of the last 20 candles. Buy strength, not dips.
Verdict: CautionBitcoin 4H: 2280 trades, won 52%, avg trade +0.5% vs random day +0.3%. Backtest
Draw a channel over the last 20 candles: the highest close on top, the lowest close at the bottom. Closes only; wicks don't count.
step 1/5
Trade rules
| Direction | Long (buy) |
|---|---|
| Entry | A candle CLOSES above the highest close of the previous 20 candles. Buy at that close. Stop at the mid-channel (halfway between the highest and lowest close of the last 20 candles, the breakout candle included); hold at most 20 candles. |
| Cancelled if | Nothing to wait for: the setup and the entry are the same candle. A close equal to the old high, or a high above it that closes back inside, is not a breakout. |
| Target | Channel height, projected from the breakout |
6 common mistakes
- Drawing the channel on highs and lows. This version uses closes, so a wick above the channel is not a signal.
- Treating every new high as a fresh trade. In a strong trend the rule fires on many candles in a row; trend followers hold one position at a time (the backtest here counts every signal).
- Expecting most trades to win. Trend rules lose often and earn their keep from a few long trends.
- Moving a trailing stop down after a pullback. It only ever moves up.
- Judging it on a bull market alone. Long-only breakouts ride the market's drift; compare them with random entries.
- Trading every lookback at once without a plan. The 55-candle version gives fewer, longer trades; pick one and stick to it.
Backtest
same rules every time · equal size · no fees · method| Market | Trades | Won | Avg trade | Random day |
|---|---|---|---|---|
| Bitcoin · 4H · 2017-2026 | 2280 | 52% | +0.53% | +0.26% |
| US large caps (50) · 1D · 2016-2026 | 21129 | 52% | +0.79% | +0.92% |
Verdict: CautionBeat a random entry in some markets, not in others.
pattern +1219%random +585%
pattern +16758%random +19512%