Thread by @IchimokuScholar

Ichimoku Kinko Hyo

Ichimoku is a complete trading system. It includes entries, exits and stop-loss placement and momentum, support and resistance.

For now we will concentrate on simple entries and taking profits using a stop-loss.

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Recommended further reading:

Elliott, N. (2007). Ichimoku Charts: An Introduction to Ichimoku Kinko Clouds. Harriman House Limited.

Patel, M. (2010). Trading with Ichimoku clouds: the essential guide to Ichimoku Kinko Hyo technical analysis. John Wiley & Sons.

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Beginners Strategy

Setup your Ichimoku indicator using these settings.

Yes they are default settings. Please don't debate which settings to use with me until you have mastered the basics.

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Your chart should look like this. I have removed the Chikou span and Tenken-Sen for now. Don't be mistaken, these are very important components to optimise the strategy. But that's for another day.

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Entries.
First we will look at a simple Kumo breakout strategy. The beauty of Ichimoku is that is allows us to place resting orders in the market.
It is important to respect trend. Unless all Ichimoku components are above cloud we are only interested in shorts.

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Entries are placed a few points above/below the Kumo (say 3% for arguments sake). Stop loss is trailed a few points above Kijun-sen.

The first trade captures about half of the move (21%)

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Now that the bear trend is established we will be taking shorts on breaks of the Kijun-sen.

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Trade two - 15%. Not bad

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Trade three - 21%, decent trade

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Trade 4 - Probably a small stopout

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Trade 5 - Still active

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Ichimoku is a is a very elegant system - not just an indicator. immersive study will be rewarded.

For now master this very simple strategy before worrying too much about the other components.

12/12 - Fin