Ichimoku Kinko Hyo

First of all, to everyone, GREAT COMMENTS! I am excited to see the enthusiasm generated thus far.. Thank you for the nice words If I don't address your post, it means I am thanking you and you didn't ask me a question or it was one I'm not willing to answer. I usually get to most though.

The "indicator" is just fancier Moving Averages. Instead of taking the true average though, the Ichimoku Kinko Hyo uses the high and low extreme average, to get more of a median than an average.

Not everyone sees everything the same. I may look at a painting and see the sun rising over the horizon, and you see the same painting and see a basketball rolling down a hill. Believe the "indicator" or not, it's my way of trading. I never have used EA's and personally dread them, and it would be darn hard to mechanize something as subjective as the ichimoku.

Look forward to hearing from you again,

Kevin


Hercs,

I am loving the enthusiasm, man. Your ideas are excellent and well thought out.

Here's the deal. I still got more to talk about So, this is what I want you to do.. Write down ALL YOUR GREAT IDEAS in a Word document as if you were talking to me, and then after I am done talking about everything, we will have a big discussion and paste your ideas if I haven't addressed the issue already. In this way, we will keep everyone on the same page with what I think, and then you guys can fire questions at me. Seriously though, I appreciate your enthusiasm, you're doing awesome. I will discuss timeframes probably in the next posts or so.

Sage,

Thanks for the nice words. GOOD catch! You are ABSOLUTELY correct. Unfortunately it is too late for me to modify that post, but hopefully everyone catches that. Thanks for bringing that to our attention. That's what I get for copy and pasting

This is hard for me to do since we have both predictive and lagging lines.

What I did was create 3 charts.

On the first chart, I have removed the Chikou Span so you can't cheat and see what the price is actually doing in this backtest. We will get to that later.

Chart #1

Yes, the Chikou Span is missing. That's alright. The price has been below the Kumo for most of this chart, and therefore has been moving down. We know that our Kumo is a point of equilibrium, so we just wait for price to move near the Kumo for entries(This is what I do). At the very right of this chart, the price breaks above the Kumo! Did you notice that the Kumo had a flat line denoting resistance? It still broke through that! Good sign for long... The Tenkan-Sen is coming up to break above the Kijun-sen as well. It's not quite there, but let's look at some of our other pieces.

Chart #2

This chart is only the Kumo in the FUTURE. I have hidden price and everything else so you don't cheat. This is the Kumo 22 candles in the future... Notice how weak and pathetic it is. That's such a pathetic Kumo Are bears weakening? It looks like it.. The Kumo was strong and yellow, but now wanes. Also, The Senkou Span A has just crossed above Senkou Span B suggesting that we may have green cloud ahead of us.

Chart #3

This is the Chikou Span and price 22 candles in the past. I don't want you to see what happens with the Chikou Span because then you will know what will happen next(as if you don't already). The Chikou Span has just broke above price and through a pivot point, meaning this is good for long.



Alright, So that's the beginning, next post will be what actually happens in a trade.

This is a very good site about Ichimoku trading, hope it helps
http://www.kumotrader.com/ichimoku_w...itle=Main_Page

Great link! It looks like there is a lot of awesome info there; maybe even more comprehensive than my explanation!

This trade turned out to be an easy one. If you had moved your stop with the Kijun-Sen, you would have probably maximized your profits. You would get stopped out when the price touched the Kijun-Sen. Later you are confirmed that you made the right choice when the Chikou Span dips under price in the past.

One could have also exited at the cross of the Tenkan-Sen and the Kijun-Sen, but this is too slow for me, and you could give forex a lot of your pips this way. It's all relative to how sharp the turn is against you. In our example the price just flattened out, it didn't shoot back down, so maybe the cross would be better. If it's a sharp shooter though, I like the Kijun-Sen. I usually just use the Kijun-Sen... It's not awlays perfect, but it's not a bad choice either.

OR you could exit at the Kumo cross in the future. Did you notice how full and green the Kumo was during the whole trade? When it started waning, you could exit if you desired.

Also, look how that Kumo flat line held true towards the end of the chart. I would expect another breakout upwards, if it weren't just before the weekend.

The point of this post is that you have a lot of options for exiting. I generally use the Kijun-Sen.

Hello Kevin!

Thanks so much for taking the time to present/demystify
the Itchy Kinky Something. LOL
I'll definitely be following your thread! Looks really great.

Brent

P.S. I'll throw it on a 5 sec. chart with a rainbow just
for fun! Ha! Talk about a Christmas tree!

Great job on this thread. This is a good indicator to use to get a very quick idea of the market. Generally, if the price is inside the Kumo cloud the market is uncertain, and I would avoid entering a trade. The great thing about this indicator is that it will show you the current trend, the strength of the trend, and support and resistance levels at a glance. There are many different ways to use Ichimoku and I think it will be a very interesting thread.

Thanks Brent! And oh my goodness... Can't say I've tried that before

Also, thanks to Trade4Cash for stopping by! I see it is your first post; feel free to continue when I open the thread up for discussion.

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Alright guys, we are on the home stretch. Everyone at this point should have a general understanding of all the parts of Ichimoku Kinko Hyo, and a VAGUE understanding of how to make trades, and exit trades. Hopefully we will get some live opportunities this week to drive it home.

Now, my last topic will be timeframes and I will address parameters a bit more thoroughly for Hercs It won't be too long; I'm going to try and keep it vague for a reason(so we can all go in different directions). THEN WE CAN ALL DISCUSS our ideas

What I have covered so far is virtually everything I know. Knowing that there are minds out there brighter than my own, I look forward to hearing the great ideas of everyone. Please don't be shy; I want to hear your idea.

THIS DOES NOT MEAN I WANT TO HEAR ABOUT YOUR GREAT INDICATOR THAT WORKS FABULOUSLY WITH THE ICHIMOKU. If I wanted to hear about your great indicator, I probably would not have made the title of the thread so specific. I know someone is going to do it, and I will ignore you, whoever you are.

Best of luck,

Kevin

Well then, where do I start?

Let's just start with the standard belief of the Ichimoku Kinko Hyo. It is generally believed that the Ichimoku Kinko Hyo can only be used on longer timeframes(4-hour, daily, weekly, monthly, etc.).

I'm here to tell you that it can work on most time frames over a minute. Sometimes I'll trade the 1-minute chart just for kicks, but usually my limit is 5-minute.

Personally, I never look longer than the Daily chart. I'll be old before I cash my pips in, and I prefer to move in and out as I please. I'm sure there will be those who like this sort of trading, and I am not here to discourage those people from doing what they want to do. In fact, I'm looking forward to hearing long-term analysis from them.

Wow, there are so many ways to use timeframes, but as a general rule, whatever timeframe you are looking to make trades on, you should look to the timeframe above that to look for key Support/Resistance.

For instance, if I am trading the 5-min chart, I will often look at the 15-min chart and sometimes the 30-min, just to be sure I'm not digging a ditch for myself.

Now, if you are really special, you could use ALL THE TIMEFRAMES. This gets confusing, let me warn you. Maybe someone will come up with a good combination. This is quite the subjective topic.

Daily Chart

On the Daily chart, Kumo flat lines tend to be more valid. Chikou Span pivot points also have more validity. Pay specially close attention to flattening Kijun-Sen lines, because price tends to run into Support/Resistance at these points. Crosses of the Tenkan-Sen and Kijun-Sen are less prone to whipsaws, and therefore a good indication of trend. It may be a good idea to mark Support/Resistance points on your Daily, so if you want to trade more short-term, then you have some areas to watch out for. UNFORTUNATELY, these Support/Resistance levels will not be perfect when you go to lower timeframes, so don't completely rely on them. Use some of that intuition in your head, too.

That's really all I have to say about time frames.

The 3-hour(4-hour) charts and 1-hour charts will have many of the above qualities.

When you get below the 1-hour time frame, I wouldn't be too quick to trust support/resistance that you are seeing. Think your decisions through. Personally, I like to make a little mental list of everything that's going for me in a trade(in terms of the Ichimoku), and now that this thread is here, it will probably be a physical list. If the list has every piece of the Ichimoku going in the direction I'm thinking, then I have a high probability trade, and if I lost, I lost. I wait for the next high probability trade.


Now, parameters. In my mind, parameters are not the most important thing in light of using more than one timeframe. To me, toggling with parameters would only apply if you stick to one timeframe. It doesn't matter what your #'s are if you get the whole picture by looking at all your charts. Sure use your #'s. I will not argue which one is better. This is irrelevant. To be honest, the reason why I use (7,22,44) is because that is Oanda's default for the Ichimoku. I never thought about it beyond this point.

Alright, to sum it up, I want to say thanks to everyone for the ecouragement along the way of this really boring task(for me). I am done. Time for bed, and when I awake I want see a million responses of immense value that will make us all better traders. I'll be crossing my fingers.


Oh and Hercs, look forward to hearing about your 5-min idea and your thoughts on Chikou Span

I was just kidding around about it, Kevin! It's great how you've established
ground rules to prevent degradation (in the guise of "filters" etc.) from the
start. Especially with this setup which really will work fine as it is. Even
better IMO would be Ichi-Pair, Ichi-TF for the thread! Now, that would
be a Zen-like focus! Only a strong Shogun could keep everyone of One-Mind!
I think that you could do it, Kevin.

Alright guys... I really want to make sure we are all getting it here. So, it's QUIZ TIME!

Let's look at our Daily USD/JPY chart, and I want to hear everyone's view on where it is going to go long-term. At the end, I will tell my opinion. I'm probably not going to fail you on this quiz, so don't be shy.

I don't have any ideas yet. I'm still absorbing it all.

I would like to commend you again for doing this. You not only know your stuff, you know how to write.

Thanks again.

1. The Tenken-Sen has crossed upward over the Kijun-Sen.

2.The negative Kumo has tapered down to nothing.

3. The Chikou span is above the past price

4. Price is in the cloud with an immediate upward trend.

I'll guess we're looking at a probable upward trend coming. How far up, I don't know.

Hi Kharvell
I am thinking the same as Billbass. If the price goes above the Kumo
it may be a buy signal.
Senbanda

I agree. The cross came prior (bottomside) to the kumo which is a stronger bullish tone and the kumo is changing attitude as well.

The span is crossing above price which reflects reflects bullish. The LONG entry was decent, with the exception of the span at the time of the cross.

I had taken this same position after the cross broke the recent high. Granted I took it within the cloud which I normally wont do, but price needs a direction and I felt a overall bullish tone was developing. Just waiting for a break of the kumo for a final confirmation.

Hrmm... Only three brave souls! That's alright Good job guys, you're doing splendidly. Nice to see that you've been trading ichimoku for a while muddbuddha! I look forward to hearing from you more.

I, also am thinking bullish for USD/JPY based off the daily.

Let me tell you my reasons, and they are very similar to yours billbss, muddbuddha and senbanda. Keep up the fantastic job

 

1. Kumo is weakening after strong bearish cloud.
2. Tenkan-Sen is above the Kijun-Sen.
3. Chikou Span has just passed above price in the past.
4. Former Chikou Span Resistance has now become support(Red horizontal line)

Points of interest:

 

1. Flat line Kumo top, will be tough for price to pass.(Purple and green horizontal lines) This will be when we will most likely see price rocket up when price passes these two points. However, if these points hold true, I would think that it will either consolidate a bit longer(then head up OR down) or head down.

Hi Sky,

You are my link library, now i can improve my knowledge with this both site / forum, specially for Ichimoku. Thanks !


By the way, may i know the best link knowledge base for MLQ program ? Maybe sometimes i would make EA for myself ( i wish to ) Then later i will compete with you or partner with you ? ( I think if you don't mind )

BTW, how your EA idea for this indicator ?

You are the good one !

Don't take this the wrong way, but if you are going to make an EA, please take your idea elsewhere(make your own thread).

For one, I have stated from the very beginning the subjective nature of Ichimoku, and I don't want to be associated with the mediocre product I feel an EA off of Ichimoku would produce.

I have handed you a silver platter, but I see your tastes are more sophisticated. Do you fancy gold or platinum, sir?

Hi Kevin,

Thank you for allowing me the privilege to tell you how the "penny dropped" in the first place and secondly, what settings I am using.

To think that this incredible indicator was designed many years ago and that it is still unbelievably effective, is almost too much to comprehend. I think the reason why people do not trade it, is because of shear ignorance. However, having said that, my ignorance cleared up when I finally realised that the default settings are very, very close to the EMAs I am using on my charts.

There are 2 professors at a University in Australia who after 2 years of extensive research, published an article to say that the 25-EMA is THE most accurate EMA on the Hourly chart and as I am an Intraday Trader, I took that research serious. I have now discovered - maybe because of the charts supplier - that the 28-EMA is even better.

As an early warning EMA, I used to use the 13-ema (now 15) with great effect.

My biggest problem was the directional EMA and it took me a while to stumble across the "correct" setting for my type of trading. Needles to say it was the 55-EMA and as it is also a Fibonacci sequence, a logical choice for me.

After I read your Thread, I nearly keeled-over when I look at the default numbers again and these are from the original developers. (9/26/52)

So, I trade the 5M with a setting of 15, 28, 55.

So as to not clutter the issues, I would like to discuss the Chiko Span separately and it follows immediately below.

Looking forward to hearing your comments.

Best wishes.

Alright guys, I do believe we may have a more immediate opportunity here at the end of this hour.

Hopefully, you have brokers that offer AUD/NZD...

I really would want to see price close below the flat line Kumo, but it's having a tough time... All other signs seem to agree though. If we see a close below the Kumo, I may take it short for a while.

 

1. Tenkan-Sen is below Kijun-Sen
2. Chikou Span is below price in the past.
3. Kumo in the future is starting to turn down after a strong green Kumo.
4. Kijun-Sen is beginning to flatten out and slope down.