Ichimoku trading

[capsmart]

I would like to introduce you to the ichimoku indicator.
What I did is I created four charts for the eur/usd on 4 different time frames. 4h, 1h, 15m and 5min.
On all of them I added the Ichimoku indicator with standard parameters. I changed the color and the thickness of the lines. I am using IBFX that is a GMT broker.
The general idea is you trade with the clouds. In the current situation you will notice that on the 4h, 1h, and 15min price is above the cloud.

[capsmart]

I am attaching a chart of the eur/usd.
We notice that price is above the clouds in the 4h, 1h and 15m. The higher the time frame the more important the setup.
We also notice that the blue line (Tenkan) is above the red line (Kijun) indicating a strong uptrend on the 4h and 1h.
One more important thing is the green line (Chikou) that must also be above the price (for a long).
When I started writing this thread even the 15m cross was ok but not any more. So now we have to wait for 3 things. The cross on the 15m (we want the blue above the red), the same for the 5min and the green to be above the price (in the 5m).
This is not a magical system. So you know that you should not trade when the market is quiet, on holidays, 15 min before/after the news etc.
And watching Marc's setups and listening to what he says every day is going to help you as well. There is no need to open a trade in the face of a 200 daily ema.
There are more details coming soon.

[Gally]

Did you previously post a fuller description of the whole system Vassilis? Could you add it to this thread so its all in one place--I can't find it (maybe I imagined it)? What's the green line for instance?

Its always looked very impressive to me, always understood it worked better on JPY pairs?? I know a couple of people who use it for commodities and almost everything. Interesting stuff anyway

[capsmart]

Hi Gally,
This was my entry for the Christmas competition. You will find the information there, but I will add more trades and details in the coming days and weeks.
Because of the names and the new concept I do not want to add too much from the beginning to give people time to absorb the info.
After all it is not much different from the ema's system we are used to, but I think it is easier to trade it and the clouds show the resistance in a better way.

[Gally]

Of course, thats why I couldn't find it on the forum. Thanks

[capsmart]

I would like to add two charts for a trade I took on eur/jpy. On the large chart you will notice that price is above the clouds in all 4 charts (4h, 1h, 15m, 5m) and I waited for the cross of the red and blue on the 5min and entered long. I set my profit target at 10 pips. This was the previous high. So I closed my trade at 111.20 even if price moved another 50 pips after my close.
Let's see once again those blue and red lines.
The fast one (the blue) is called Tenkan Sen and it shows the average of the highest high and highest low for the last 9 periods. So if it is flat that means that the high and the low for the last 9 periods remained the same.
The slow one (red line) is called Kijun Sen and calculates the same as the Tenkan but for 26 periods. If it remains flat that means that price for 26 periods did not make a new higher high or lower low.
So when the Kijun is flat the Tenkan will also be flat.

[PabloOnFX]

Hi Caps,
firstly thankyou for sharing your method with us all.

Going for 10 pips at a time is understandable but whats the typical SL you have in place?

Pablo

[capsmart]

First I would like to say that I am also experimenting with this system so no matter what, you should try it on demo or with minimal lot size. There are many things to consider, like price distance from Tenkan, distance from the cloud, thickness of the cloud etc.
So in the book I read it will trade only daily charts and therefore the 9 line (blue Tenkan) is suggested as stop loss. In our case for a 5 min chart this would be too short, so for now I am using the other part of the cloud.
In Forex factory where I follow a thread about ichimoku the author also suggests the same but he aims for 50 pips profit which is a nice ratio.
I would also think about using a special trailing stop that starts moving as soon as price moves.
But generally speaking I think that a 20 pip stop could give some air to breath for the trade to start testing the system.

[raa]

Guys, maybe offtopic here, but speaking of stop loss, what do you think of Parabolic SAR? Mostly it is very accurate from what I saw.

[capsmart]

I agree that SAR is a good tool, but you could also use fractals or a donchian channel. Both tools will identify previous highs and lows. They also exist MTF indicators so even if you are on the 5 min you could have a donchian channel for the previous x hours.
Generally speaking with short time frames, after the signal, price will move relatively fast in your direction or not. So it is better to start with a fixed 20 pip stop loss and have a tool that after 10 pips will close 1/4 of your position, move stop loss at 10 bellow/above entry and wait. If price moves another 10 pips, close 1/4 and move stop loss to b/e etc.