Donchian Channels EA for MT5 Faithful Implementation of Tom Basso’s Trend Following Breakout System
This Expert Advisor is a clean, fully automated trading robot that brings to life the classic Donchian Channel breakout methodology exactly as described by legendary Market Wizard Tom Basso in his webinar recording “Trend Following Buy/Sell Engines”.
The strategy is pure trend following at its core: it waits for a strong price breakout from the Donchian Channel and then rides the trend as long as it continues, using the opposite channel band as a dynamic trailing stop. No fancy indicators, no repainting, no over optimization, just simple, robust price action based on closed bars.
How the Trading Logic Works
- Entry Rules (confirmed on live price action):
- Buy (Long): Ask price crosses above the upper Donchian Channel band by at least 1 pip.
- Sell (Short): Bid price crosses below the lower Donchian Channel band by at least 1 pip.
- Stop Loss & Trailing Stop:
- On a long trade, the lower Donchian band acts as both the initial stop loss and the trailing stop.
- On a short trade, the upper Donchian band serves the same purpose.
- The trailing stop updates only once per bar at bar close and moves exclusively in the trader’s favor. It never moves against the position.
- Exit: The trade is closed automatically when price touches the trailing stop level. There is no take profit target, allowing winners to run as far as the trend carries them.
The EA strictly allows only one position at a time and does not use pyramiding, martingale, grid, or any other high risk techniques.
Risk Management Built-In
Position sizing is fully dynamic and conservative:
- Lot size is calculated before every trade to risk exactly the chosen RiskPercent (default 1.0%) of the current account balance.
- The calculation uses the real stop distance (difference between entry price and the opposite Donchian band).
- A MaxAllowedLot parameter (default 5.0 but editable) adds an extra safety cap.
- Risk is recalculated on every new trade, making the EA suitable for growing or fluctuating account sizes.
Practical Advantages
- Multi-Symbol and Multi-Chart Ready: You can attach the EA to as many charts and instruments as you want (Forex pairs, XAUUSD/Gold, commodities, indices, cryptocurrencies, etc.). Each symbol automatically receives its own unique Magic Number (derived from BaseMagicNumber + symbol hash) so instances never interfere with each other.
- Seamless Recovery: If you restart MetaTrader, reload the EA, or switch timeframes, it instantly detects any existing open position opened by this EA and continues managing the trailing stop without interruption.
- Lightweight and Clean: The EA does not draw any objects on the chart and does not generate alerts or sounds. It is designed purely for serious automated trading.
- Period: Default 21 (the same period used in Tom Basso’s “Trend Following Buy/Sell Engines” webinar), but fully adjustable via the DC_Period input.
Additional parameters include EnableCriticalLogging (for detailed trade and trail stop information in the Experts tab) and full control over risk and lot limits.
Who Is This EA For?
Traders who appreciate simple, time tested trend following systems and want a reliable, hands off implementation of the Donchian breakout method taught by one of the greats in the industry. It is especially suitable for those who like to “let winners run” and accept that not every breakout will become a big trend (typical of pure trend following systems).
Important Disclaimer
As with any trading system, past performance is not indicative of future results. The markets involve substantial risk of loss. Please test the EA thoroughly in the MetaTrader 5 Strategy Tester, optimize the parameters for your preferred symbols and timeframes, and run it on a demo account for a sufficient period before considering live trading.
