Advanced Ichimoku Trading Strategy in Forex Trading (2018)
Hello. Forks lens subscribers. And members this, is John I have, not actually recorded. A video yet on how to use the Ichimoku system, because we do use that frequently, in our trading, it's a very. Very. Well known trading system it's very easy. To, learn. And and. And trade, and it's probably one of the best, systems. In my opinion, that if you have not been profitable, trading then, trade the Ichimoku system. Because it, teaches you, a, whole. Bunch, of, technical. Analysis, components, that, in, under, one roof and it, will greatly help with, your your, your learning, and your your trading alright, so let's just kind of go through how to set this up well very. Easy I just. Have a new a new, chart, here nothing on it and I, just go to indicators, and if. I just type in I see H I or, itchy I look for here it's your mu cloud and. Then. This goes on our screen here all right now. The default settings are fine there's nothing wrong then it's just that I. The. Colors, or, the length, of the lines or the width bother me a little bit so so. What, I like to do is. Never. Change these, don't. Ever change those but. I. Like. To make the conversion, base, and legging, span lines. You. Know one, or two thicker, and, then. The, lead lines, we. Don't need those, but. We do need the backgrounds, plotted and those are fine. All. Right now, let's just kind of go through what the, components. Are of, the, Ichimoku system. Well. The, first one is is. Probably, what, you notice right away about this is it's called the cloud alright, and the. The, cloud is made up of two lines and we're, gonna see those actually, the ones that we'd kind of remove they're called lead one or lead to their. Actual, names. Are cinco, span a and, Sinko span B. Right. There's Japanese names for all of these but. We, have since, tried. To just call them something. Different, but. I think it's it's. Relevant to know what, the original Japanese. Names are because this is a Japanese, trading system and, if, you ever wonder why these settings, are the way they are it's. Because the gentleman who created this prior. To world war 2 now. This guy he, was a hard-ass because, he. Took, all of this past, charting. Data in Japan and, on rice, charts and he. Had all of his, interns basically, go, through every, single past chart, to. Analyze certain. Kinds, of behaviors, and then after, he had all of his interns do the work for him he he, put, it together slap the label on it and there was the Ichimoku system, but oddly this. Really didn't come to the states or, to the west rather until. Really. The 1990s. And we got got pretty popular in the 2000s. And. It's and it's still around and it's it's. An indicator, but, it's really a trading system but, but it's it's, so successful and a testament, to its to, its staying power is that that it's it's everywhere and we, never want to change these these, values, because these were the original values, that that were set because the Japanese, market. At the time traded. On a six-day, trading. Week not a five-day like we've always had it was a six-day, just. Little trivia. There so. The. Components, again we. See the cloud, that. Is called the kuhmo or, just, the cloud and the cloud is is. Fairly. Easy. To. To. Look at and understand. How it forms, as soon as we identify what, these other lines are. We. See these two first, kind of averages, so if I get rid of the cloud. Get. Rid of all these other lines so we can isolate these. We. Have the conversion line or the or the tankinson, or we. Have the base line which is the kitchen center and these, are not regular, moving averages these are averages, of the, average so, this. Line is not like normal moving average you can see that a flattens out sometimes because it takes it's, still it's still an average period of time so the baseline is done, over. Over. A 26. Past. Candlesticks. But it takes the average of. The. Candlesticks, not the clothes like like most moving averages they. Calculate. The clothes and then put it these are taking the averages, of the candlesticks, so the mean or, the mid of each candlestick, that's what if that's what these that's. How these eg muku lines. Are formed, so that's the that's. The conversion line and the base line but then, the cloud. How. The cloud, is formed. And. We'll. Get rid of the price here the cloud is just it, just takes. The. Conversion. Line and the base line, its. Displaced. A little bit so it's this place like it's moved up or down in this case it's moved it's moved up a little bit. But. It's just these lines, are thrust, forward in time. 52. Periods. So. The the, the, singko span or just, the leg the lead, the leading lines.
These. Are at the bottom and the top of the cloud are just the past, movement. Of. The. Conversion. Of the baseline move forward and then they, color the clouds in so whenever, the conversion line is greater than the baseline the the. Space between them is colored green whatever the conversion, is below the base base. Line it's. Colored red and because. We do really don't need the lines to see that that's the only reason why I take them off you can certainly keep them on there but I don't feel like we need to see the lead lines when, we've already got the, cloud there okay. And. Then. The, last component. Is. Probably, the most misunderstood. Component. And, that is. Called the leg expanded, I think the legging span is the most important. Component well. I don't know how you could it is very important, and for whatever reason, there's, a lot of muku, tutorials. Out there that disregard, it like oh we don't need to use it yeah, you do it is there for a reason and it is it. Is absolutely, stupid, that a lot of people do not utilize it but the. Legging span it's, also it's, also called the the. Chico span it. Is the current price action so again if I just remove, all of this here. Oops. It. Is. The current price action. But. It's it's, moved back 26. Periods so. You. Can see this better if I use a line so. If I use a line chart instead candlesticks, you, can see that it's just that that's all the all the legging span is is the current price action it's just it's just the current price action is may it align 26. Periods back alright. And. So. Those are all the components, of. The. Ichimoku, system. But. Now we need to know well how do we trade this what is what is what, is the point of all of these things well how do we how do we trade it I actually like to call it a legging span black. Easier. To see for me at least oh. Forgot. To put the. Cloud. Well. There. Are rules, that we need to follow because the most important, part of the Ichimoku system, is not.
Where. You are taking trades it's telling you when not to trade ok if you're. Familiar with Bollinger. Bands, and you, know about the squeeze you know when that when that when the - when. The - the, upper and the lower bands, start to constrict, that's called its forming a squeeze etcetera in consolidation. Before. John Bollinger even came up with that we've, we've, known, about this the Japanese Japanese had this in the Ichimoku system, whenever. Price, is inside. The, cloud. We. Do not take a trade. We. Do not trade, when. We are inside, the cloud all right that is telling us that there, is no clear direction that. We're in an area of consolidation, we don't take trades in the cloud it's very easy whatever, time frame you're trading on if you see prices inside the club don't, trade it very, easy. But. Let's say we're, inside the cloud let's. Move back here let's go to let's. Go to like a four-hour chart. Well. Now we can go down here but. Let's say we're inside. The cloud, here, floating, around you know above and below it I want, to see a better one. Sometimes. The dailies are two, on. Some. Instruments, use. The for our. Trying. To find a good example to use. Well. What we'll use this one here, all. Right so we're, inside. The cloud right here on the 4-hour chart maybe actually, 1 hour. Yeah. That's a little better will do this is a good example so we're, inside the cloud we don't take a trade. But. When do we take a trade if we're gonna take a long trade if we're gonna go long the. Rules are very simple. First. Rule, price. Must. Close. Above. The cloud a. Second. The cloud ahead. Must. Be bullish. Or green. Third. Is that, the conversion, line. Must. Be greater is. Greater, than. The baseline and, fourth. Is that. The, lagging span, is. Greater. Or. Crosses. Above the. Cloud. Okay. So. Those are rules for going long. Rules. For going long price, must be above the cloud the, cloud ahead must be green, and or. Bullish, the conversion, line must be greater than the baseline and the legging, span is greater, or. It crosses above the cloud. All. Right and so, this is what I mean if we do a market replay and, I. Put our price action here and this brings us back in time and so we can we can replay. Past price action I, really. Encourage everybody, to do this find. A chart you don't trade that you're not familiar with try your best not to look ahead in the future do a market replay and then and then, kind of mock. Trade it how you how, you would if, it was live so. Here we're in the cloud we're not taking a trade there's, no clear trade because we're inside the cloud. But. If I, pause this I have a condition met, now to be looking there there's a signal, that saying ok we may have a change happening, we're either entering consolidation. Or we, could see a change. In the, trend where we could get a breakout for a long trade and what was that that was when the conversion line crossed. Above the baseline that's called a they, also call that a TK, cross because the conversion. Line is also the, the, tankenson and the, base line is big is the, the key Jensen and so, they call this a TK, cross, so. That's cross that tells us that there may be a change happening, soon, so. Price is still moving and. I. See, price, moved, up but it didn't close above the cloud we're still inside the cloud it, got to the top there but it didn't close above now, right there, right. There we did close above the cloud all. Right we, have three conditions met. Three. Conditions, met four taking a long trade the cloud ahead is green. The. Conversion, line is above. The baseline price. Closed, above the cloud, what. One is missing the, lagging span is not above, the cloud yet once the lagging span goes above the cloud then, we can take the trade and that, is, the. Power of. The. Of the of the lagging span of the Ichimoku system. Because. We're showing, that the current, price action is, moving. Beyond. Past. Future. Projected. Price prices. Based on based, on a series of average. Of averages, that, sounds really confusing just, know that when the lagging span finally, moves outside of the cloud that is usually the final trigger that. Tells you we're. Good to go and, that's. The thing that most issue mukha trading systems for whatever reason, choose to disregard they're just a lot, of Ichimoku trading systems tell you just okay whenever you close above or below the cloud you just take a trade and that is that's. A very dangerous way to trade don't do that I hit.
Play So I'm, waiting. For a close. Right. Now I would enter so, you'd enter a trade right there and. We. Can observe, well. We know what happens already because we watched this play out. And. We say we can speed this up a little bit, and. Notice. As we're moving when. Price comes, down, where. Is it finding some support it's. Usually finding, support right on the conversion line correct that's, a sign of a strong trend when you see prices, move. Out of the cloud and then they come back to the conversion line generally, the first one or two tests, of that conversion line is enough. Of a, signal that. We're in a that we're gonna have a strong trend for a little while, certainly. When we start to cross below though when, we start to cross below the conversion, line and hold below it and we can't find support, at the baseline that is, telling us that, the trend is weakening, and and. Sometimes. Some people say that the, area. That you take profit, is when the teet when there's another TK cross when the. Tankinson. Crosses, below the kijun center or the conversion line crosses, below the, base line and, that. Is where you would take profit. Okay. And so we're really watching this play out and. Another. Another, area. For taking profit would be when the lagging span is no longer above price and it starts, to come back in and, actually I just missed something is that, if. We enter into situations. Like we just saw here. That's. Not what I wanted. See. Where price crossed, a below, and then we start to see a little bit of consolidation, here as, we're approaching the cloud. People. Often ask well when do I take a trade. Well. If you see situations. Like this where prices is trading, above and below the. Conversion. And baselines and the conversion at baseline are even sitting on top of each other whenever. The liking span is trading inside price that, is an early warning sign that trends, are gonna change but if, the. Lagging span breaks. Out. Above. Price, again that, soon you start taking a long trail again. All. Right. Now. What, we want to do next is we want to identify a, short, trade and so how do we how, do we trade a short. Signal. And. We, can do that. Back. Hmm. Drag. That along with me. We. Can use this. Okay. So that, was our long trade rules our, short trade, rules are going to be just the inverse of this so short trade, rules, first. Is that price, must, close, below, the cloud. Cloud. Ahead must. Be bearish. Or, red. Conversion. Line is. Below. The. Baseline, and. For. Is the legging span is. Below. Or, crosses. Below. The. Cloud. Alright. Oops. The. View. Okay. So in this scenario. We. See we won't do a market replay but we can see that prices, in the cloud and then, as price drops out of the cloud. Well. You know what the leggings banned oh yeah, well the legging spans already out that that, was our signal if we're trading inside the cloud here we'd wait to get outside the cloud as long as the the leggings, fan was outside and below, the cloud we're still good for that long trade.
And. And, if this is just like taking the long you know you look at you, look at your price, action and how it's traded, notice. That in strong. Trends. You're going to find some, a lot, of support off the conversion line you'll also find it on the base line and. And. On, top, of the the. Above. The the. Top of the cloud the cloud itself actually acts, as a strong, strong. Support, zone and, so. If I'm looking right, now this is actually pretty good example we're live right now and. I'm. Looking at the dollar yen and the dollar yen on the hourly just. Turned. Into a short, opportunity. Okay. So this is this, is the seventh, of June. At. 6:00, p.m. Central time and. Taking. A short here is probably, going to be a pretty lucrative trade, oh, wait, you know what I take that back. Okay. Sometimes these. Sometimes. You do want to see. Yeah. Okay. So. The is the cloud ahead red here's the shirt signals that we're looking for is the cloud ahead red. Yes. Is. Priced. Below the cloud yes is the conversion line below the base line yes is the legging span below, the cloud yes. It is so, this right here is, a short. Trade. If. We. Would have gone short, when, we first broke out we would have experienced, a lot of ping, pong around, and whipsaws, and and, why why bother, let let, other people. Figure. Out where this is going to go we just need to get on the same train and, the. Final, signal, the final trigger for, going. Long or going short depending which way we're going with, each muku system is this lagging, span, the. Lagging span is. Is. The is the real kind. Of hidden trick, of a chi muku systems that win this guy finally crosses. Below. Or above the cloud that, is the final trigger that you need, to. Move because very, very rarely. Will. You get a break out of a cloud with, the lagging, span and then, the market decides to turn the opposite direction. That. Could happen. But. Right now we have on the hourly all four, conditions met for, going short, all. Right. That. Is the Ichimoku, system, i. Think. This, is most effective, the, longer the time frame you go the more effective the system is going to be and that really, goes with, anything. I'll, tell, you that. Anything. Longer than a week. Daily. Charts for the Ichimoku system, are phenomenal. You. You get tremendous, signals. Doing it this way, but. I'll tell you that one. Little trick where you can violate the rules is on a weekly chart okay. On a weekly. Chart often. All you need in. The. Ichimoku system. Just, the legging span in the cloud. Because. Changes. Things are not, often very sporadic. And nor, do they move you. Know a. Crap-ton. Like, they do on shorter time frames but. Signals. On the Ichimoku system, on weekly charts often all you need is a break, of the cloud and a close above or below with the legging span moving. Above or below it as well okay.
That. Is often all you need for. Signals. On the weekly chart and. You should look at multiple time frames with a Chuco system you can get phenomenal. Signals, with the Ichimoku system, by. By, having. Multiple. Time frames so if I'm looking at the hourly chart I see. That that is a that. Is a good signal if I look at the 4-hour chart, you. Know what am I looking at I'm looking at we're right, on top with a cloud I could. To start drifting into it. If. I look at it on the daily, we're. Still above the cloud but we're entering in some weak areas why because. The oh you, know what maybe if I put there. Why. Reentering weak areas well the the conversion, line cross below the baseline we didn't find support, at the baseline legging. Span is trading inside price so that is telling me that we have weak, conditions. In. The dollar yen going, going ahead and that we have a sell, signal so anyways. I hope, I didn't go too long-winded with. This I, hope. That you found it helpful and useful because we. Do use this during. Our trading, sessions, this is this, is kind of the basis, for. What. We take a lot of trades off of in, addition to the Gangi ama tree that i do do, but this. System, is very effective. It. Is proven, to work, but. If the. Ichimoku system, doesn't work for you that's your fault you're. Either your, they're not following it or you're, you're not following it or you're over over trading or over leveraging, or you're trading, on to shorter timeframes. Hourly. To, daily. Ichimoku. System, that's the way to go. One, hour for our eight-hour, charts, daily. Charts that's. The way to go. Trust. The, system. Trust. The system. When. I've started using it I still. Lost money on it because I didn't trust it I thought. I still, thought that even though I was losing money all the time that I knew better than a tried-and-true, method, that's been around since, World, War two prior to World War two you know obviously, I know much more as a traitor who's new and losing money obviously.
I Know that that, this system doesn't work, boggles. My mind why I did that and I know some of you have gone through that too way where, you don't trust the system enough where you think you know what is best but, really it's just your, psychology, and motions getting out of trades so, follow, it like a machine and it'll. Steer you into the direction of profitability, and successful. Trading and and that'll set up a good stage for you in your trading career. Hope. To see you all in. The. Trading room here in the future whenever you're watching this I hope we have been, giving you some good trade, advice education. And ideas and. Hope. This finds you well and we'll, talk to you again bye-bye.