First published in , many of the 20 trading guidelines from Richard Donchian are as relevant today as they were during the golden age of technical analysis. Richard Donchian is known as the father of trend following. His original trend following ideas form the basis for all trend following success that has followed. Richard Donchian. Quick facts about Richard Donchian: His account dropped below zero following the stock market crash. He began his market career as .

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Generally, when the second move from the richard donchian range has run its course, a counter donchiian approaching the sideways range may be expected. In he changed his focus from securities richard donchian to active trading and developing his rule based technical system.

Seldom take a position in the direction of an immediately preceding three-day move.

During the summer of he became an account executive and securities analyst with Hemphill, Noyes and Corichard donchian still working richard donchian the Vice President of the Samuel Rug Company. Retrieved from ” https: Reversal or resistance to a move is likely to be encountered.

Instead of following the original 4WR to exit a position, traders can exit when a moving average is broken. Expect resistance or a bearish reversal when prices decline and then return richard donchian this level.

Probably the first such system was the weekly rule donchina by Richard Donchian. Richard donchian using this site, dnochian agree to the Terms of Use and Privacy Policy. For several years thereafter, he publishes a stock market service, “Security Pilot,” and sells it to brokerage houses.

This hands-on book will also show readers how to configure a bullish and bearish watch list from which to set your entry and exit prices. Conversely, richard donchian for selling opportunities when prices advance richard donchian a trendline on average or low volume.

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When a new four-week high richard donchian reached, GOOG was bought; it was sold about 10 weeks later when it made a new four-week low. Trade in smaller amounts during times of uncertainty.

Four-Week Rule Boosts Winning Trades

Moves in which rails lead or participate strongly are usually more worth following than moves in which rails lag.

A security’s capitalization, its activity level in the marketplace richard donchian its trading characteristics are just richard donchian important as its fundamentals.

Wait for a one-day reversal. During a move, take or increase positions in the direction of richard donchian move at the market the morning following any irchard reversal, however slight the reversal may be, especially if volume declines on the reversal.

Rather than subjectively determining a new high richard donchian low, the 4WR defines, in advance, when a signal is generated and all analysts using the 4WR will arrive at the same conclusion. Sell securities that are in downtrends and show relative weakness.

Donchian Trading Guidelines [ChartSchool]

Views Read Edit View history. This guideline overrides any other guideline.

Richard donchian prices are above a major trendline rising donchiqn, use minor trendlines falling to define short pullbacks and generate buy signals with upside breaks. Divergences between the averages lead most analysts to express caution about the trend.

He is a trend following disciple who credits Richard Donchian as a major influence in the development of his trading philosophy. Short positions would only be entered when the market is on a 4WR sell signal. Richard donchian traders should consider adapting the 4WR to their trading styles. Let your profits run and cut your losses short. This can be done by applying Dow theorya widely richard donchian barometer of the health of the market. In Figure 2, we see a winning trade in Goldman Sachs.

This shows a typical winning long richard donchian. Triangles of ether slope may mean either accumulation or distribution depending on other richard donchian although triangles are usually broken on the flat side.

This assumes that the upswings will be larger than the downswings riichard a series of rising peaks ricahrd troughs evolves. Keep in mind that there is nothing magic about four weeks. In order to use StockCharts. The Richard donchian Davoud Donchian Foundation was established after his death in April ; its aim is to make improvements in Children’s Health and to help its ultimate recipients become empowered to dinchian and build up their families and communities — passing onto others that which was given to them.

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After this second advance, chartists can expect a counter move and decline richard donchian towards the consolidation.

The 4WR can be richard donchian with sonchian, such as the relative strength index or moving average convergence divergenceas a filter on these signals. A broad market advance is suspect when transportation stocks lag. Don’t count on gaps being closed unless you can distinguish between breakaway gaps, normal gaps and exhaustion gaps. In Richard was appointed Director of Commodity Research with Hayden Stone richard donchian he commenced writing a weekly newsletter, Commodity Trend Timing, based on his moving average method.

When prices trade in a narrow range with little volatility, look for a richard donchian increase to confirm the direction of the next richard donchian. Considered by many doncbian the father of trend following, Donchian developed one of the first trend following richard donchian based on two different moving averages, which were cutting edge in the early thirties.

Chartists should not count on a gap being filled unless they can determine rchard kind of gap it is, which is easier said than done. In taking a position, price orders are allowable.

The first publicly managed futures fund, Futures, Inc.