Forex Strategy Trading Ichimoku
Indicator Ichimoku (Ichimoku Kinko Hyo) or as it is called "equilibrium chart" to determine on Forex market trades with a high probability of profit, and Ichimoku cloud serves as a filter of information chaos.
The trading terminal Metatrader 4 This is called forex indicator Ichimoku Kinko Hyo
This type of trade is still poorly familiar with the basic mass of traders, but its popularity is growing. Effectiveness Indicator forex Ichimoku confirmed by multiple tests in the forex market, it combines three indicators forex on one chart, which ultimately gives us a ready trading system that does not require any more forex indicators and allows for this trader make the right decisions at the conclusion of the transaction, as becomes more informed trader by applying it.
This forex indicator describes the behavior of prices in the market from different directions, making it possible to find deal with a high probability of success. Although many FOREX traders this indicator tends to scare the abundance of "any" lines on the chart, but the components of the indicator forex can be easily translated into a much more familiar form.
So Ichimoku indicator consists of 4 main components , to help Forex traders understand the behavior of prices in the currency market forex.
Let us first consider the line Tenkan and Kijun Sen . They represent nothing more than the 20-and 50-day moving averages, albeit with a slightly different time scales.
1. line Tenkan Sen - represents the sum of the highest high and lowest low of the chart, divided by two. Line Tenkan Sen is calculated for the previous 7.8 candles on the chart.
2. line Kijun Sen - also represents the sum of the highest high and lowest low in the graph divided by two, but the line Kijun calculated for the last 22 candles on the chart.
to open a trading position in the chosen currency pair, the trader is looking for the intersection of these lines - which is similar to moving average (Moving Averages).
In Figure 1 we see a clear line of intersection Tenkan Sen (black line on the graph) and the line Kijun Sen (red line on the graph) at a point defined as the "X". This signal tells us that the price will soon fall down.
Figure 1 - The intersection of the lines Ichimoku
And now propose to consider the most important component Ichimoku indicator - is "cloud", which represents the current and historical behavior of prices in the market. Ichimoku cloud behaves in much the same as a simple line of support and resistance, creating a barrier.
Ichimoku cloud is formed of two main components:
3. Lines Senkou Span A - calculated as the sum of lines Tenkan Sen and Kijun Sen, divided by two. No account is taken of last closed 26 candles.
4. line Senkou Span B - calculated as the sum of the highest peak on the graph and the lowest low divided by two at the same time. No account is taken in 44 closed and the candles as they are shifted by 22 candles ahead of time.
The area between these lines is called Kumo, or "cloud Ichimoku". Extensive cloud Ichimoku trader provides a very good filter. This cloud allows you to take into account the volatility of the currency pair on the market. Breakthrough Price through a cloud of Ichimoku and subsequent movement above or below it, indicates the trader a better and more likely a bargain.
For examples, see Figures 2 and 3.
For example, USDCAD currency pair, we observe an appreciable difference between the two price schedules. Although we see a clear support at 1.1522 on the chart familiar to us (see Figure 2), the price again later tests this level. At this point some of the deals can be knocked out of the market for stop-loss, because price pulls back in the opposite direction. But the example of the indicator Ichimoku (see Figure 3) Ichimoku cloud for us is a great filter. Taking into account the volatility in the market, Ichimoku cloud gives a better opportunity to trade at the break of 1.1450. In this case the price is not rolled back, while holding the pulse of the bargain in a downtrend.
Figure 2 - A classic breakout level of support and resistance levels
Figure 3 - Indicator Ichimoku gives the best chance for a breakthrough application
Finally, last component of the indicator Ichimoku - Chikou Span . Showing the mood in the currency market, Chikou a market price at closing, which is shifted at the same time for 22 periods ago. This characteristic indicates the sentiment of the forex market, while showing the underlying trend in relation to the now existing momentum of prices. The point is simple: if the foreign exchange market is dominated by sellers, the line will be Chikou Span and fluctuate below the price chart, and just the opposite - as when trading on the currency pair will lead buyers Chikou Span line rises above the price chart.
Figure 4 - Chikou line helps to identify the foreign exchange market sentiment
Now let's add it all together:
Let's try to understand best way to trade by Ichimoku indicator - a technique clouds.
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Figure 5 - The lines tell us everything
Consider the following example - USDJPY in Figure 5, and slightly increased the scale of the image - in the end see Figure 6. From the beginning, the currency fluctuated within a price range between 116 and 119, and Forex traders awaited breakthrough in the market. At all times, while the market is trading sideways, Ichimoku cloud acted as a support-resistance for the market price. Having determined this, we turn to the lines and Tenkan Kijun Sen. And as mentioned earlier, these two indicator lines are working, as a moving average, where the Tenkan is a more short-term average, and the line Kijun - the main line moving. As a result, once the Tenkan falls below the Kijun, we get a trading signal of a possible price drop on the market. But as long as the intersection is in the cloud at point A in Figure 5, and therefore the signal is not unambiguous. In order that the trader could think about entering the market, the signal for the transaction must be located outside the Ichimoku cloud. We can confirm this downward trend in the market with Chikou Span, which at this point is still below the price chart. Conversely, if the line is above Chikou price chart, it would speak to us about the rising sentiment. Combining it all together - now we will look for an opportunity to open a trading position on the sale of our chosen currency pair.
Figure 6 - The entry is located just below the cloud Ichimoku.Since
mypriravnivaem Ichimoku cloud to the levels of support Lieb resistance, before opening any trading position to sell, we make sure that the closing of the trading session lower happened Ichimoku cloud . The result - open position at point B on our chart. In this case we have a confirmed break of Ichimoku cloud at the level of support for 114.56. Forex trader at a given point may decide to immediately open a trading position below the support level of 114.56 or they place a pending order one point below the minimum torgoovy session. Placement of a pending order one point below, will be an additional confirmation that the impulse of movement in the market is still down. After that, we will place a stop loss just above the high of the candle within Ichimoku cloud. In our case, it would be at point C, or at the level of 116.65. The price of the market should not trade above this level, if the momentum is still preserved. As a result, we are entering the market at a price of 114.22 and a safety stop-loss at 116.65, while our risk is 243 points.
In accordance with the basic rules of money management set the ratio of profit to risk of 2:1. Market price was down to its lowest level 108.96, which is approximately 500 points, which implies that our transaction considered earned a good profit.
But remember that the indicator Ichimoku is usually applied to large time scales, in this case, to the day (D1).
Now repeat learned:
1. crossing lines and Kijun Tenkan - good help to identify potential price movement in the market (and acts like a moving average).
2. Confirmation of the trend with a line Chikou - Make sure that the mood of the forex market for this currency pair corresponds to the intersection of the lines and Kijun Tenkan - a significant increase the likelihood of concluding a profitable trade, as Chikou acts like an indicator of Momentum.
3. Price on the chart have to break through the cloud Ichimoku - that the trend in the market has become pronounced, the price to break out of the clouds acting as a resistance to support. This will significantly increase the likelihood of concluding a profitable trade.
4. With a deal - follow the rules of money management (the risk of the concluded transaction, always should be at least 2 or even more times less than the desired return).
relatively strange and a little weird right Ichimoku indicator forex , if it is well to study, can be very useful for any trader forex - from the beginner to the professional trader .