Several backtests and application in my actual trading produced very good results. Let me first tell you how it all started. I started reading all the materials I could get my hands on, watched Youtube videos and studied charts shared by many in Facebook and trading groups. No matter how I tried I could not seem to get the head or tails of the technique. Whenever I am faced with a lot of information, I usually put everything in writing to make sense of what they are telling me. The Chart below is my first attempt in doing this.
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This unique strategy provides trading signals of a different quality. Forex trading involves substantial risk of loss. Although, with Ichimoku cloud trading, those losses are contained and kept small. The Ichimoku system is a Japanese charting method and a technical analysis method. Our team at Trading Strategy Guides mastered the method over a long period of time. This candlestick trading technique has stood the test of time.
The name Ichimoku tells a lot about the trading system, or at least it gives a description of the system. Ichimoku cloud trading attempts to identify a probable direction of price. It helps the trader determine the most suitable time to enter and exit the market by providing you with the trend direction. It gives you reliable support and resistance levels and the strength of these market signals.
The most popular Forex trading platforms use the Ichimoku Cloud indicator. The Ichimoku indicator paints all the components needed to help visualize the price action better. The Ichimoku cloud is one of the most comprehensive technical indicators in modern use. In the Ichimoku cloud section, we are going to give you an in-depth overview of the Ichimoku components. We will review how to correctly interpret the trade signals generated by this technical indicator.
It can also define accurate support and resistance levels. The Ichimoku Cloud indicator consists of five main components that provide you with reliable trade signals: Tenkan-Sen line, also called the Conversion Line, represents the midpoint of the last 9 candlesticks. Kijun-Sen line, also called the Base Line, represents the midpoint of the last 26 candlesticks. Chiou Span, also called the Lagging Span, lags behind the price as the name suggests. The Lagging Span is plotted 26 periods back.
Chikou Span, represents the closing price and is plotted 26 days back. While the Ichimoku Cloud indicator involves multiple five different lines, reading the graph is actually very easy.
Using the trend lines mentioned above, you will then need to determine whether Leading Span A or Leading Span B is currently higher. When this is the case, the graph will be shaded green. On the other hand, when Leading Span A is below Leading Span B, the underlying asset is likely moving in a negative direction.
When this happens, the cloud will be shaded red. When the price is in the middle of the cloud the trend is consolidating or ranging.
Furthermore, the Ichimoku charting technique provides bullish and bearish signals of various strengths. When the Tenkan crosses Kijun from below, it is considered a bullish signal. When the Taken crosses the Kijun from above, it is considered a bearish signal. The Kijun line is shown as the red line above. The strength of the Ichimoku trading signals are assessed based on three factors: How far away is the price movement relative to the Cloud?
How far away is the Chiou Span relative to the Cloud? How far away is the Cross-over relative to the Cloud? Because many of the lines on the Ichimoku Cloud chart are created using averages, the chart is often compared to a simple moving average chart. The relationship between Leading Span A and Leading Span B will indicate whether there is a strong downtrend or uptrend. Pay attention to both the color green for bullish, red for bearish and the size of the cloud.
The Ichimoku Cloud is useful for day traders and others who need to make quick decisions. The cloud is often paired with other technical indicators, such as the Relative Strength Index, in order for traders to get a complete picture of resistance and support.
Many traders will also look out for crossovers in order to determine when trends have reversed. Ichimoku cloud trading requires a lot of self-discipline.
This is because you have to wait for the best trade signals. Our trading rules will help you follow the trend for as long as possible. The Ichimoku system suits swing trading best. This is because it maximizes profits while minimizing the risk involved in trading. Here is how to identify the right swing to boost your profit.
The Ichimoku Kinko Hyo best time frame is the one that fits you best. This swing trading strategy will teach you how to ride the trend right from the beginning. You will also learn how to capture as many profits as possible. Ichimoku cloud trading requires the price to trade above the Cloud.
The cloud is built to highlight support and resistance levels. It highlights several layers deep because support and resistance is not a single line drawn in the sand.
It is several layers deep. So, when we break above or below the Ichimoku Cloud, it signals a deep shift in the market sentiment. A high probability trade setup requires more layers of confluence before pulling the trigger. This brings us to our next requirement for a high probability trade setup.
The price breakout above the Cloud needs is followed by the crossover of the Conversion Line above the Base Line. Once these two conditions are fulfilled, we can look to enter a trade. The Ichimoku Cloud indicator is a very complex technical indicator. The indicator is even used as a moving average crossover strategy. See below…. Step 3 Buy after the crossover at the opening of the next candle.
Ideally, any long trades using the Ichimoku strategy are taken when the price is trading above the Cloud. Our team at the TSG website has adopted a more conservative approach.
We added an extra factor of confluence before pulling the trigger on a trade. So, after the crossover, we buy at the opening of the next candle. Notice the strong buy signal in the graph below. The next important thing we need to establish is where to place our protective stop loss. See below… Step 4 Place protective stop loss below the breakout candle. The ideal location to hide our protective stop loss is below the low of the breakout candle.
This trading technique accomplishes two major things. Here is an example of a master candle setup. Second, it helps us trade with the market order flow. The next logical thing we need to establish for the Ichimoku trading system is where to take profits. We only need one simple condition to be satisfied with our take profit strategy.
When the conversion line crosses below the baseline we want to take profits and exit our trade. Alternatively, you can wait until the price breaks below the Cloud, but this means risking to lose some parts of your profits.
In order to gain more, sometimes you have to be willing to lose some. Use the same rules for a SELL trade — but in reverse. In the figure below, you can see an actual SELL trade example. See the strong sell signal in the conversion line. Thank you for reading!
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Ichimoku - page 2
Read more to learn how the Ichimoku indicator works and how to interpret the different lines. Moreover, we often mix up knowledge and understanding. The latter is the only one that counts in analysing a problem, finding an appropriate solution, and making an informed trading decision. Once you understand that there is a difference between information knowledge and information assessment and understanding, you will get better results as a technical analyst or chartist. You will then start to look among the existing technical analysis tools to find the one that will help you better understand the market. Who created the Ichimoku indicator?
Best Ichimoku Strategy for Quick Profits
Thanks in advance for changing these settings. The KS line is like ichimiku magnet for prices when they go too far away from it: This is because of the way it paints the cloud with trendlines. The difference between the TS and a Moving Average MA is that with the TS, each time there is a new candle the highest high and lowest low changes, thus the average point changes as well. You need to be a member in order to leave a comment. Another important aspect is the space in front of the LS: These are the lines: Posted May 23, The values of individual lines composing this indicator are based on these intervals:.
Ichimoku Trading: The Only Guide You’ll Ever Need to Read
This unique strategy provides trading signals of a different quality. Forex trading involves substantial risk of loss. Although, with Ichimoku cloud trading, those losses are contained and kept small. The Ichimoku system is a Japanese charting method and a technical analysis method.