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video we will talk about ichimoku cloud trading strategy and also you will learn how to use the
ichimoku cloud indicator in trading how to use ichimoku cloud for day trading and swing trading
ichimoku cloud trading strategy is a technical indicator system used to assess the markets
this unique strategy provides trading signals of a different quality forex trading involves
a substantial risk of loss although with ichimoku cloud trading those losses are
contained and kept small the ichimoku system is a japanese charting method and a technical analysis
method the ichimoku indicator was published in 1969 by a reporter ichimoku kinku hyo in japan
this candlestick trading technique has stood the test of time ichimoku cloud trading attempts to
identify a probable direction of price it helps the trader determine the most
suitable time to enter and exit the market by providing you with the trend direction
it gives you reliable support and resistance levels and the strength of these market signals
now before we delve deeper into the ichimoku cloud strategy let's
look at the indicators needed to successfully trade the strategy what is the ichimoku cloud
in trading the most popular forex trading platforms use the ichimoku cloud indicator
the ichimoku indicator paints all the components needed to help visualize the price action better
the ichimoku cloud is one of the most comprehensive technical indicators in modern use
unsurprisingly it has quickly become the go-to indicator for forex traders around the world
in the ichimoku cloud section we are going to give you an in-depth overview of the ichimoku
components so before moving forward let's define all the ichimoku cloud components we
will review how to correctly interpret the trade signals generated by this technical indicator
the ichimoku cloud indicator consists of five main components that provide you with reliable
trade signals one ten consent line also called the conversion line represents the midpoint of
the last nine candlesticks it's calculated with the following ichimoku formula nine period high
plus nine period low divided by two two ki jun sen line also called the base line represents
the midpoint of the last 26 candlesticks it's calculated with the following formula
26 period high plus 26 period low divided by two three chikku span also called the lagging span
lags behind the price as the name suggests the lagging span is plotted 26 periods back
for senku spanner also called the leading spanner represents one of the two cloud boundaries and
it's the midpoint between the conversion line and the baseline conversion line and baseline divided
by two this value is plotted 26 periods into the future and it's the faster cloud boundary
five senku span b or the leading span b represents the second cloud boundaries
and it's the midpoint of the last 52 price bars 52 period high plus 52 period low divided by 2.
this value is plotted 52 periods into the future and it's the slower cloud boundary
how to use ichimoku cloud indicator in trading while the ichimoku cloud indicator involves
multiple five different lines reading the graph is actually very easy when leading span is above
leading span b this indicates to traders that price momentum is currently increasing
when this is the case the graph will be shaded green on the other hand when leading spanner is
below leading span b the underlying asset is likely moving in a negative direction
when this happens the cloud will be shaded red despite the graph complications simply
looking at the colors of the cloud can help you determine the direction of the market
here are some basic interpretations of the ichimoku charts when the price is above the
cloud we're in a bullish trend when the price is below the cloud we're in a bearish trend
when the price is in the middle of the cloud the trend is consolidating or ranging furthermore the
ichimoku charting technique provides bullish and bearish signals of various strengths
when the tenkan crosses ki june from below it is considered a bullish signal when the taken crosses
the key dune from above it is considered a bearish signal the keyjune line is shown as the red line
above the strength of the ichimoku trading signals are assessed based on three factors how far away
is the price movement relative to the cloud how far away is the two span relative to the cloud
how far away is the crossover relative to the cloud because many of the lines on the ichimoku
cloud chart are created using averages the chart is often compared to a simple moving average chart
however ichimoku is more dynamic than a simple moving average chart as it's designed to help
detect changes in support and resistance the relationship between leading span and
leading span b will indicate whether there is a strong downtrend or uptrend
pay attention to both the color green for bullish red for bearish and the size of the cloud
when the cloud between these lines is small then the trend will not be very strong
the ichimoku cloud is useful for day traders and others who need to make quick decisions
the cloud is often paired with other technical indicators such as the relative
strength index in order for traders to get a complete picture of resistance and support
many traders will also look out for crossovers in order to determine when trends have reversed
ichimoku cloud trading requires a lot of self-discipline this is because you have to
wait for the best trade signals we're going to use the default settings of the ichimoku cloud system
how to use ichimoku cloud for day trading the best ichimoku cloud day trading technique is the
edge-to-edge cloud setup according to the ichimoku cloud edge-to-edge strategy the price has the
tendency to visit the other side of the kumo cloud once a candlestick closes inside the ichimoku
cloud as you can figure out the ichimoku by cell signals are very intuitive one by signals occur
when a candlestick from below the qmo cloud breaks and closes above the leading spanner two c signals
occur when a candlestick from above the qmo cloud breaks and closes below the leading spanner on
out some of the false signals that will naturally show up next let's see how to
trade ichimoku indicator if you're a swing trader how to use ichimoku cloud for swing trading swing
trading with ichimoku cloud works extremely well if you use the kumo twist trade signal
please note that the kumo cloud is the leading element projected 26 periods
into the future of the ichimoku indicator now you might wonder what is a kumo twist
the q mo cloud twist happens when the leading span and leading span b cross when leading spanner
crosses above leading span b that's a bullish reversal signal and when leading spanner crosses
below leading span b that's considered to be a bearish reversal signal see the ichimoku chart
note that the cloud will switch colors from green to red and vice versa when the kumo twist happens
now let's move one step forward and learn how to make money by applying the ichimoku trading rules
note that moving forward we're not going to delete the lagging span moving average from our charts
this is because we don't base our trade decision on it since it's lagging the price
ichimoku cloud trading strategy by rules the ichimoku cloud system is designed to keep
traders on the right side of the market our trading rules will help you follow the trend
for as long as possible at least until it's clear that a reversal is occurring
the ichimoku system suits swing trading best this is because it maximizes profits while minimizing
the risk involved in trading here is how to identify the right swing to boost your profit
the ichimoku cloud best time frame is the one that fits you best
as we don't have a preferred time frame so here we go ichimoku cloud trading step by step
step number one wait for the price to break and close above the ichimoku cloud
ichimoku cloud trading requires the price to trade above the cloud
this is because it's a bullish signal and potentially the beginning of a new uptrend the
cloud is built to highlight support and resistance levels it highlights several layers deep because
support and resistance is not a single line drawn in the sand it is several layers deep so
when we break above or below the ichimoku cloud it signals a deep shift in the market sentiment
a high probability trade setup requires more layers of confluence before pulling the trigger
this brings us to our next requirement for a high probability trade setup step number two wait for
the crossover the conversion line needs to break above the baseline the price breakout above the
cloud needs to be followed by the crossover of the conversion line above the baseline once
these two conditions are fulfilled we can look to enter a trade the ichimoku cloud indicator is a
very complex technical indicator the indicator is even used as a moving average crossover strategy
now we're going to lay down a very simple entry technique for the ichimoku kinko hyo
trading system step number three by after the crossover at the opening of the next candle
ideally any long trades using the ichimoku strategy are taken when the price is trading
above the cloud so after the crossover we buy at the opening of the next candle
the next important thing we need to establish is where to place our protective stop loss
step number four place protective stop loss below the breakout candle
the ideal location to hide our protective stop loss is below the low of the breakout candle
this trading technique accomplishes two major things first it's significantly
lowering the risk of losing big money second it helps us trade with the market order flow
the next logical thing we need to establish for the ichimoku trading system is where to
take profits step number five take profit when the conversion line crosses below the baseline
we only need one simple condition to be satisfied with our take profit strategy
when the conversion line crosses below the baseline we want to take profits and exit our
trade alternatively you can wait until the price breaks below the cloud but this means risking to
lose some parts of your profits in order to gain more sometimes you have to be willing to lose some
now what do we think about this strategy the ichimoku cloud strategy is slightly different
than probably anything you're used to when it comes down to technical analysis if you're having
a very difficult time finding true support and resistance please apply the ichimoku cloud trading
techniques highlighted in this video we hope that by now you're convinced that the ichimoku cloud
system is a good way of identifying the trends and profit from trading any market in any time frame
it can easily capture eighty percent of the trend if you follow the rules in the
ichimoku cloud explained section thanks for watching hope you guys have enjoyed the video
and please don't forget to like and subscribe to the channel i'll see you in the next video