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Trading with Ichimoku Clouds
The Essential Guide to Ichimoku Kinko Hyo Technical Analysis
The essential guide to today's hottest technical indicator-the Ichimoku Kinko Hyo cloud chart.
Ichimoku Kinko Hyo is a technical system that illustrates support and resistance values in a simplified form and is considered an extension of the very popular candlestick charting system. In fact, the system was built on the idea that at "one glance" you should be able to determine whether an instrument is in equilibrium (consolidation) or out of equilibrium (trending).
Written in a straightforward and accessible style, Trading with Ichimoku Clouds offers a solid foundation in this discipline as well as its technical strategies. It shows you how to create and implement a trading plan based on this approach that can easily be tailored to your trading style.
- First available U.S. publication on this hot trading trend
- Reveals how Ichimoku Clouds work in both bullish and bearish markets
- Highlights how these strategies can easily be adopted for stocks, futures, bonds, and other vehicles
- Works with all timeframes and all tradable instruments
Filled with in-depth insights and expert advice, Trading with Ichimoku Clouds will help you implement a proven strategy designed to capture trends that maximize profits and minimize losses. Furthermore, the user will be taken step by step through the entire decision-making process of trading an instrument for two years (back test).
Preview the Book: Trading with Ichimoku Clouds: The Essential Guide to Ichimoku Kinko Hyo Technical Analysis
Hardcover: 210 pages
Author: Manesh Patel
Publisher: Wiley (June 28, 2010)
ISBN-10: 0470609931
ISBN-13: 978-0470609934
Ichimoku Kinko Hyo is a technical system that illustrates support and resistance values in a simplified form and is considered an extension of the very popular candlestick charting system. In fact, the system was built on the idea that at "one glance" you should be able to determine whether an instrument is in equilibrium (consolidation) or out of equilibrium (trending).
Written by Manesh Patel—one of the pioneering U.S. practitioners of Ichimoku trading and administration of Kumotrader.com—Trading with Ichimoku Clouds offers a detailed look at this proven approach as well as its technical strategies. Chapter by chapter, it shows you how to create and implement a trading plan based on this discipline that can easily be tailored to your trading style.
Along the way, it also takes you step by step through the entire decision-making process, from entries and exits to triggers, in order to test the trading plan created and ensure you've developed a successful system that fits your personality and circumstances.
Other topics touched upon throughout this accessible trading guide include:
- Why this approach works with all time frames and all tradable instruments
- The five essential indicators associated with Ichimoku Kinko Hyo
- Which strategies can easily be adopted for stocks, futures, bonds, and other vehicles
- How Ichimoku Clouds work in both bull and bear markets
- How trading psychology influences trading
- How to perform post-analysis of a trading system and then optimize the system with this information
- And much more
Filled with in-depth insights and expert advice, Trading with Ichimoku Clouds will help you implement a proven strategy designed to capture trends that maximize profits and minimize losses. If you're looking to become a better trader, following some of the characteristics within this system is a step in the right direction.
Download Excerpt: Trading with Ichimoku Clouds: The Essential Guide to Ichimoku Kinko Hyo Technical Analysis
PDF format, 3.41MB.
CHAPTER 1
Ichimoku Components
Before I start to explain all the Ichimoku components, I need to discuss some background information. First, I use the daily time frame as the main reference time frame throughout the book. However, this does not mean that Ichimoku Kinko Hyo only works for the daily time frame.
Today, Ichimoku is used at the tick level, 1 minute, 3 minutes, 5 minutes, 60 minutes, 120 minutes, daily, weekly, and so forth. The reason why I discuss the daily time frame is that everything moves at a “slower pace” than the minute time frame. You can “see” everything this way. In order to be able to trade a faster time frame like a 5 minute, you must master the daily time frame.
The next question everyone asks now is: Should we look at a lower time frame along with the daily time frame? To answer that question you have to look at the three different types of trades that exist:
1. Trend: Price goes in one direction for a long period of time. During a trend, the higher time frames influence the lower time frames where the lower time frames are supporting the higher time frames (Figure 1.1).
2. Countertrend: Price has gone in a certain direction for a long time already. Now, the trader believes that the trend is over and the trader wants to trade against the trend. During a countertrend movement, the lower time frames are not supporting the trend. They are going against the trend to a point they influence the high time frames (Figure 1.2).
3. Consolidation: Price is not going in one particular direction at all. It is going back and forth between major support and resistance values (Figure 1.3).
If you do not know how to recognize whether an instrument is trending, in a countertrend mode, or a consolidation mode then you will get confused when you look at the lower time frames. Using multiple time frames is an advance optimization technique. Once you trade the daily time frame for a while, you will learn when price is trending, going against the trend, or in a consolidation pattern. ...
CONTENTS
Introduction ix
Background ix
Components of a Trading System xv
CHAPTER 1 Ichimoku Components 1
Tenkan Sen 4
Kijun Sen 10
Chikou Span 19
Kumo Cloud Components 25
Senkou Span A 27
Senkou Span B 28
Kumo Cloud 30
CHAPTER 2 Ichimoku Trading Plan 41
Components 41
Strategy Description 42
CHAPTER 3 Ichimoku Backtesting 45
Backtesting 45
EURUSD—A Two-Year Backtest 46
Summary—Two Years of Backtesting 134
CHAPTER 4 Post-Analysis 137
Examining the Backtest Results 137
Optimize Trading Plan 144
CHAPTER 5 Ichimoku Strategies 149
Ideal Ichimoku Strategy 150
CHAPTER 6 Ichimoku Time Elements 161
Ichimoku Time Elements 161
CHAPTER 7 Applied Trader Psychology/
Doug Laughlin 171
Is It as Easy as Just Being Taught a New System? 172
The Problem We Have with Getting in Our Own Way 172
Is There a Conspiracy Against the Small Trader? 173
Traders Myth—Smart People Make the Best Traders 174
Losing Trades Are Acceptable 175
A Successful System Will Fortify Your Convictions 176
Self-Sabotage and How It Applies to Your Trading 178
In Summary—Trader Psychology Overall 179
CHAPTER 8 Day Trading with Ichimoku 181
Consequences of Trading without a Trading Plan 184
Trading Plan 185
Backtesting 186
Conclusion 192
CHAPTER 9 Conclusion 193
Ichimoku Analysis Sheet 195
Bibliography 199
About the Author 201
Index 203
About the Author
MANESH PATEL, CTA, is the President of EII Capital Group, a financial company that offers a variety of services, including money management, consulting, and trading. He is a technical trader whose technical foundation is built around a Japanese trend trading system called Ichimoku Kinko Hyo.
With Ichimoku Kinko Hyo, Patel trades the following instruments: currencies, futures, options, stocks, and commodities. He is actively involved in Ichimoku trading and runs www.ichimoku.net and www.kumotrader.com, which has 125,000 subscribers and is ranked 260 among active Forex Web sites.
Patel is a member of the National Futures Association (NFA) and received his master's in engineering from Georgia Institute of Technology.
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