Secret behind the chart | explanation of technical indicators: tangqi'an channel

Donchian Channel（ Tangqi'an channel index ） Is the oldest used for trading breakthroughs 、 One of the simplest technical indicators . By Richard Donchian The proposed one consists of three lines （ The upper resistance line 、 Lower support line 、 Center line ） Composed channel index .

Generally speaking , The wider the tangchian passage is , The more volatile the market is , And the narrower the tangqi'an passage is , The less volatile the market is . Besides , The price trend can pass through the Bollinger belt , But you can't see this feature of the donchian channel , Because its band is measuring the highest and lowest prices in a specific period .

   Tangqi'an channel calculation principle and code implementation  

The upper resistance line = In the past n The highest price in Japan

Lower support line = In the past n The lowest price of

Center line = Mean value of upper resistance line and lower support line

The default is 20 cycle , Very simple and intuitive .

In Shanghai and Shenzhen 300 Stock market index （2021-12-01 to 2022-04-06） For example , Demonstrate the channel strategy of tangqi'an . The calculation of the upper and lower tracks of tangqi'an channel is very simple .

Plot the closing price, the upper and lower tracks of the channel and the center line . It should be noted that , In fact, the strategic signal is to compare the closing price with the tangqi'an channel index of the previous trading day （ To avoid future functions ）, The results are also shown in the second subgraph . You can find , The price breaks down the lower support line , The indicator sends a short signal .

   Application of tangqi'an channel  

1、 Judge when to buy or sell

Tangqi'an passage is often used as Breakthrough indicators . It provides two main types of breakthrough signals , One is the upper resistance line or the lower support line , The second breakthrough signal is centerline crossing . 

Common policy logic Yes ： When the price breaks through the upper resistance line , Do more ; When the price breaks down the lower support line , Short . More aggressive investors will use the center line of the donchian channel to generate breakthrough signals , Instead of waiting for the upper resistance line and the lower support line to break through , That is, when the price goes up and breaks through the center line of tangqi'an channel , Do more ; When the price breaks down the center line of tangqi'an channel , Short .

Besides , In strategy practice , Many technical indicators are often used in combination , Or add filter conditions , To improve signal reliability .

here , We take Shanghai and Shenzhen 300 Stock market index （2020-01-01 to 2022-04-06） For example , Compare the advantages and disadvantages of the buy and hold strategy and the Tang Qi'an channel strategy . Here we use the donchian channel strategy , That is to break through the track and go long , Break through the track and short , Do not change the position when inside the track .

 

however , It should be noted that , Tangqi'an channel is a traditional trend indicator , Common problems with trend strategies , It is applicable to the market with obvious trend , And in the volatile market performance is poor .

2、 Set stop loss position

Finally, some investors use tangqi'an channel to judge stop loss conditions . Stop loss thinking is also very simple , Just set the stop loss at the channel boundary in the opposite direction of the transaction .

for example , Traders buy when they break the track , Stop loss should be set in the channel ; Sell when you get off the track , Stop loss should be set on the upper track .