What does the Donchian system do...

LeviF · Post by **LeviF** » Thu Apr 10, 2008 9:05 am

...if the (long) entry stop price is not hit, but then the breakout threshold drops below the stop price?

sluggo · Post by **sluggo** » Thu Apr 10, 2008 9:59 am

Could you draw a picture showing what you mean?

Maybe your picture would resemble the drawing in section 11.16 of the Trading Blox User's Guide on page 90.

Better yet, run the Donchian system (available in Blox Pro and Blox Builder), go to the Trades tab, find a chart that shows the situation you're wondering about, and capture a screen image of that exact situation. Then paste it here to clarify your meaning.

(Search the forum for Screen Capture to find several freeware software packages that do this...)

LeviF · Post by **LeviF** » Thu Apr 10, 2008 10:12 am

This happened to me yesterday with a practice forex account. I had a buy stop order for AUD/USD at 0.9352. The high was 0.9345 so it didn't trigger my stop. When I generated orders last night, my x-day breakout threshold dropped to 0.9320, but the AUD was then trading at 0.9334.

sluggo · Post by **sluggo** » Thu Apr 10, 2008 11:34 am

Run Donchian with the default parameters, on the All Liquid portfolio. Look at the chart of Gold in the vicinity of 11 July 2007. Is that an example of the scenario you're talking about?

edit: found a more dramatic example

LeviF · Post by **LeviF** » Thu Apr 10, 2008 11:38 am

I'm not on my computer. Screen shot?

gunter · Post by **gunter** » Thu Apr 10, 2008 1:03 pm

I would firstly check the logic.

If the market traded at a high of 0.9345 yesterday, then the breakout for today should be at least 0.9345 (depending on number of days).

If the logic is correct, then you need to still take the breakout.

However, I suspect you are trading a forex account with OANDA, and with them there are no gaps. So I suspect that there is a logic mistake somewhere.

I hope this helps.

Cheers

gunter

LeviF · Post by **LeviF** » Thu Apr 10, 2008 1:32 pm

I think what happened is that after my EOD data was downloaded and processed, the market proceeded to rise. TB generated orders for the new x-day high, but the current price was above that and obviously TB didn't know that.

Since the price was above my entry stop, I entered a market order with my TB calculated stop, but reduced position size so that my % risk was the usual amount. Maybe I should have waited for the next entry signal?

I guess these are just the issues one faces when going real-time...

RedRock · Post by **RedRock** » Thu Apr 10, 2008 6:05 pm

levijean wrote: I guess these are just the issues one faces when going real-time...

Yup