If you wish to see the initial system, visit the Tradingwins. The system relies mostly on the Ichimoku Kinko Hyo system , although it is stripped down version of it and has a few add-ons. It is a simple system based on a few indicators that will tell you in a second whether you have a trade setup or not. Before I go any further, please note that this document assumes that you are already familiar with Forex and Forex trading.
I will not teach you to trade Forex. If however you are a beginner and need advice on resources to help you learn the skills of Forex trading, you will find a few recommendations here: This system works on any market, any timeframe.
I use it to trade forex on the H4. For that kind of trading, the H4 is ideal because it will give you a reasonable volume of trades and a good grip on the momentum moves of a pair without forcing you to keep a constant watch on your trades. Since this strategy aims at catching trending moves, we are looking for clean charts and want to avoid cluttered pairs where volatility is high with unclear price directions, violent swings or spikes, …. The system uses five indicators, that might seem a lot, but they all have a function and actually they are a tremendous visual aid for reading graphs and to me they make things much simpler.
The Ichimoku Kinko Hyo system is a very elaborate but simple system devised by a Japanese journalist named Goichi Hosoda in the late s and released to the general public in the late s after 30 years of testing and improvement.
It is a very complete system giving an instant view of market conditions, possible entries, exits, support and resistance levels and key past and future market levels. Below is a representation of the system and the five lines that compose it we only use three of them:.
The Ichimoku system is a moving average based trade identification system. It is quite elaborate and novice traders might find it difficult to read.
However, in our trading system we are only using two of the core components which are the Kumo cloud and the Kijun Sen , since the information they provide is sufficient for the kind of market conditions we want to identify.
Moving averages are the single most used indicator in trading. Exponential moving average reduce the lag by giving more weight to recent prices, therefore we prefer it to SMA. It also tends to be one of the most widely used moving averages, and as such it is kind of a self-fulfilling prophecy. A lot of traders are always going to react around it. In this system it is used to confirm a trend, we will be looking for strong slopes as indicators of strong up or down trends. It was created by Welles Wilder in The formula to calculate the RSI is the following: In the standard setting of the RSI, the average gains loss are calculated by adding all the gains losses for the past 14 periods.
We use it with a setting of 7 periods as we want to use it to trade quite a short cycle. Fractals were developed by Bill Williams as part of a system that he created mixing the Chaos Theory with Human Psychology. Taken alone, fractals are indicators that actually break larger trends into smaller and simple reversal patterns. A fractal is composed of five or more bars, and there are two types of fractals:. The fractals are turning points, and we will use them for our stop loss placements initial and trailing.
The idea is that in a. See a representation of fractals on the right, swing lows are the red fractals and swing highs are green fractals. I think that can be ok if it remains in a reasonably tight zone around the 50 level and if all other conditions are met, especially the slopes on EMA and Kijun.
That is left to trader appreciation but I have found to miss significant market moves if I get too strict on an exact hit of the 50 mark.
For stop-loss placement I have already explained that I use fractals. Again, it is a simple and straightforward rule. The reason for using fractals is that they represent key short term swing highs or lows.
And the same goes for a short trade. If a down fractal is broken by an upward move then my conditions for a downtrend are no longer met. Experience has proven that keeping losses at a minimum is absolutely crucial.
I try to aim for 3R usually. Reading the market with this system is extremely simple. You only need a few seconds on each pair to know if you have a trade. Well, there you have it. Among the many books written on Ichimoku, there is one I definitely recommend if you want to take things further. It will provide you with a lot of very valuable strategies, on all time frames.
It has been written by Karen Peloille, a french specialist who has taught tons of traders in banks and financial instituions worldwide. She is very renowned, straight to the point and known to be one of the most consistent traders around. Find her book below third in row.
My Ichimoku trading Strategy You are here: My Ichimoku Trading Strategy. What market conditions are we looking for? Since this strategy aims at catching trending moves, we are looking for clean charts and want to avoid cluttered pairs where volatility is high with unclear price directions, violent swings or spikes, … Two examples of what I mean below: Clean chart, clear trend Cluttered chart, high volatility, spikes, swings What indicators?
The Ichimoku cloud and Kijun Sen The Ichimoku Kinko Hyo system is a very elaborate but simple system devised by a Japanese journalist named Goichi Hosoda in the late s and released to the general public in the late s after 30 years of testing and improvement.
Below is a representation of the system and the five lines that compose it we only use three of them: What will the Ichimoku indicators tell us? Basically, what the cloud and Kijun Sen will tell us is the following: The projected portion of the cloud can also be used as an indication of future market conditions.
The height of the cloud is a representation of volatility, so a thinner cloud would indicate lower volatility, and a thicker cloud will represent stronger areas of support and resistance. A crossing of SSA and SSB lines usually triggering a change in the cloud color is called a Kumo twist and can be a sign of potential trend inversion. In our system its slope is particularly important, so we use it both as a confirmation of the trend and as a potential trigger for exits being a representation of significant support or resistance lines.
It is commonly accepted that the RSI has the following index thresholds: A fractal is composed of five or more bars, and there are two types of fractals: For a long trade , the following conditions need to be met: There will however be some cases of entry when the Kijun is not yet sloping upwards; this will be a discretionary decision, the most important is the 21 EMA; the idea is to catch a swing low on the uptrend and enter when the trend resumes. To time our entry, we use the RSI as a gauge of speed and momentum of price movement, and therefore we need it to dip towards the 50 mark and bounce back up again after hitting it.
The signal candle will be the one where the RSI goes back up. To time our entry, we use the RSI as a gauge of speed and momentum of price movement, and therefore we need it to move towards the 50 mark and bounce down up again after hitting it. Stops For stop-loss placement I have already explained that I use fractals. For exits, that is very discretionary. Several options are open: R you are aiming for. Pairs traded Reading the market with this system is extremely simple.
Here are the ones I trade: Next steps Among the many books written on Ichimoku, there is one I definitely recommend if you want to take things further. You might also like to learn about Bitcoin and cryptocurrencies. Buying Bitcoin and Altcoins. The top 3 Cryptocurrency and Bitcoin analysis tools October 13, - October 3, - 9: November 9, - 4: November 6, - 6:More...