Ichimoku Kinko Hyo trading system...!

[zzebie]

4xpipcounter,

Thanks for acknowledging my question.But i am not clear with the answer. I'll rephrase my question.

As the senkou spans are projected forward, let us say after 26 periods from today,there is a cross between senkou span A crosses from below to above of senkou span B. Let us also assume today's price is above the kumo.Hence giving us a strong bullish signal

Let us call today as date 1. 26 periods from today when projected spans cross being date2.

So should i be treating this scenario as a bullish indicator effective date1 or date2?

Thanks and regards,
zzebie

 

[4xpipcounter]

Zzebie, the ichimoku is an excellent and highly accurate indicator, as not only will I atest to, but several who trade using it. I think the pros that use it will agree with me that there is nothing really cut-n-dry about trading with the ichimoku. Let me give you a few scenarios:
1. Price crosses the top of the cloud (senkou span), while the tenken and kijun follow close behind. Without a doubt that is a buy signal. You look ahead and notice the cloud is dipping strongly, or looks bearish. That is telling you I got a winning trade, but be aware. Look at any ichimoku chart. Once you fly to high above the cloud you have to come down, as price action always gravitates back to the cloud. (Picture yourself as a pilot. You are enjoying a great flight and all is calm, then you get a warning from the altimeter that you have risen too high. Now, you look in back you and see that you are about even with the clouds in back. That's about as high as you want to go. In trading, you pull the keys out. In other words, get out of the trade for a nice gain. Uhhhh, don't try that in a real plane--lol.)
2. The opposite scenario could also prevail. You pass through and on top of the cloud. You look 26 candles up, and find the cloud is bullish, or rising. That usually suggests you are in for a wonderful ride.
3. A warning sign is if you pass on the other side of the cloud, but the tenken and kijun are not following. They've leveled or are on the other side of the cloud. That is a warning the conditions are not optimum.
4. The same can be said if the kijun is on top of the tenken and the tenken is divergent from the kijun. I don't care what the clouds in the future or the past is saying. I treat it as a headfake and stay away.
5. If the chinkou has crossed the candles after pulling through the cloud. That is a good signal. Northern skies are ahead, but remember when you fly too high above the cloud that can also be trouble.
Just view different charts in different time frames, and you'll see what we are saying. Once you study it, demo trade with it, and then see some gains with it, you will be surprised just how wonderful this indicator really is.
Again, picture yourself as a pilot. You are not just looking at the cloud 26 candles in advance, but you are circumspectly looking all around. You are checking where the clouds were in the past, the conditions of the tenken and kijun the chinkou, the nature of the break of the cloud, and the cloud's thinness or thickness.

4xpipcounter,

Thanks for acknowledging my question.But i am not clear with the answer. I'll rephrase my question.

As the senkou spans are projected forward, let us say after 26 periods from today,there is a cross between senkou span A crosses from below to above of senkou span B. Let us also assume today's price is above the kumo.Hence giving us a strong bullish signal

Let us call today as date 1. 26 periods from today when projected spans cross being date2.

So should i be treating this scenario as a bullish indicator effective date1 or date2?

Thanks and regards,
zzebie

 

[linkon7]

every user of this system has broken it down to indications that they can identify with. It's just the interpretation of the user... This is my interpretation. My look at the making of the cloud...

If we look at the daily TF..then 26 period represents 6 months. senkou span B is made by taking 50% retracement of the highest high and the lowest low of the last 12 months and shifting it 6 months into the future.

so if we are trading at the start of the C period and A, B and C slabs are 6 months wide... then the highest high made in the last 1 year is 500... lowest low made is 200 so 350 is one reference level, while midpoint of KS and TS of the B period will form the other ref level of the cloud.

Now as we trade though the end of C period, the A period is discarded and now new ref level is 250 i.e. (400+100)/2 made by the levels of B and C period. The control point, TS and KS of the C period, together make the other ref level of the cloud...

The beauty of this system is that after completion of 1 bar (day), the oldest bar of the 12 months is discarded, hence the transition from one slab to another is seamless.

Now the question is... how important is the future value in today's context..?
My view is, its not that important. As what is going to make the reference value of the next slab of D period is already available to us, namely the KS and TS of the C period.

The depth of the cloud tells us the volatility of the present period and the future depth of the cloud can give us insight of how strong the resistance / support can be in the future. But the crossover of the span A and span B ..is something i havnt been able to figure out till date...

 

[4xpipcounter]

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Linkon, the thing I still haven't been able to get around is the formula to derive the senkou , but as you mentioned, the cloud has more depth when the price action is more volatile.
I posted this chart to show the characteristics of the crossover in the future. Notice where the A and B crossed. That corresponds, of course, to the candle 26 back. That is where that huge bearish candle is at. The market had broken from its strong upside, (Flying above the cloud.) to going bearish. This turn of events is also reflected into the future.
Afterward, the market went sideways for awhile, and the cloud 26 candles reflects that. Then we had a break to the downside, and the cloud followed suit.
The current signal gave a strong sell signal as we had the TK cross near the top of the cloud. Once broken out of the cloud the TK followed.
What is now off the chart is the brief recovery the market had, and it entered and hit the top of the cloud. Every indication shows it will return to the DOWN, as the cloud is very bearish into the future.
What I mentioned about the Senkou cross pattern has been an observation on my part, but it has helped me a lot in my trading.

every user of this system has broken it down to indications that they can identify with. It's just the interpretation of the user... This is my interpretation. My look at the making of the cloud...

If we look at the daily TF..then 26 period represents 6 months. senkou span B is made by taking 50% retracement of the highest high and the lowest low of the last 12 months and shifting it 6 months into the future.

so if we are trading at the start of the C period and A, B and C slabs are 6 months wide... then the highest high made in the last 1 year is 500... lowest low made is 200 so 350 is one reference level, while midpoint of KS and TS of the B period will form the other ref level of the cloud.

Now as we trade though the end of C period, the A period is discarded and now new ref level is 250 i.e. (400+100)/2 made by the levels of B and C period. The control point, TS and KS of the C period, together make the other ref level of the cloud...

The beauty of this system is that after completion of 1 bar (day), the oldest bar of the 12 months is discarded, hence the transition from one slab to another is seamless.

Now the question is... how important is the future value in today's context..?
My view is, its not that important. As what is going to make the reference value of the next slab of D period is already available to us, namely the KS and TS of the C period.

The depth of the cloud tells us the volatility of the present period and the future depth of the cloud can give us insight of how strong the resistance / support can be in the future. But the crossover of the span A and span B ..is something i havnt been able to figure out till date...

 

[4xpipcounter]

This is just an innovative way I have also used the the cloud in the future. It would be related to an Elliot Wave extension, only be able to see things in the future.
Let's say the candle is above the current cloud. Then, I look at the candle as it is projected into the future, and notice the cloud has descended. Afterward, I'll take a cursory look at general price action in the past. All I am doing is getting a conceptual idea of what the highest point is that the candle has flown above the cloud, and then I will take a tape measure or any other measuring instrument, measure the distance, then take that same measurement and project that from the top of the cloud in the future. If that level is below current level, then we are coming down.
Naturally, the same is so below the cloud.
Just try this. It might astound you.

 

[VaibhavPRO]

Hi

Gr8 thread lincon.. It has given me good insights into this ichimoku system. This indicator looks different and interesting. What makes it stand out is that there is no fixed way to trade it and one needs to learn more and more from it as he goes along.

Also would like to thank Mr4xpipcounter for making me interested in this indicator after u made quite a few ripples here in TJ with ur analysis on nifty. Looks like u r the latest hotproperty of TJ .

Now to the real purpose of writing this post . i would like to ask u both What parameters to use for Ichimoku system when using it for Indian Equity markets. This 9,26,52 is not making much sense to me. Do u guys trade using these parameters only??If not While viewing Daily TF charts what should be the ideal parameters??I feel it should be 5,22,44. What do u think guys?? Can we play with the parameters or 9,26,52 is best in ur view??


Thanks
Vaibhav

 

[4xpipcounter]

LOL, are you saying I have a reputation to live up to? I did get quite a few comments about that, though. It was ichimoku spotted the support, and the other parts of my methodology that saw it falling that far from the 6,000 region.
With regards to your question, I have always used the default setting at 9,26,52. When I get the chance, I am planning on doing some experimenting with the 10,32,64 settings. The reason for this is that a normal cycle (Just a blanket average, nothing in stone.) is closer to 28 candles. In times past, I have found how effective the Bollinger Bands that instead of using the 20,2 settings, I used the 32,2 and 32,3. I wanted a complete cycle measured, and then catch the break when the cycle was over, and that was the object in my thinking. Also, sigma 2 made no sense, considering there was also a 2% chance of sigma 3 being hit.
I'm thinking of that same logic with ichimoku, but have not started, so I've derived no conclusions. Regardless of the outcome, 9,26,52 has worked perfectly, and I am really only looking for ways to fine tune my system.
5,22,44 would be up to you to configure. Someone told me Nifty is closer to a 20-candle cycle, and maybe that is where you got the 22 and 44 from.
I'm assuming you are looking at the 5 to possibly derive more signals. There are others in this thread that are quite astute when it comes to the ichimoku. My perspective is, and someone might disagree with me, and that is you don't want that first number too low, because you don't want false signals. That is something to consider when you crank it down too low.
Let me also be clear about something. BB and IC are distinct indicators. IC measures the flow, balance, and equilibrium of the markets. BB's measure the standard deviation of the market.

Hi

Gr8 thread lincon.. It has given me good insights into this ichimoku system. This indicator looks different and interesting. What makes it stand out is that there is no fixed way to trade it and one needs to learn more and more from it as he goes along.

Also would like to thank Mr4xpipcounter for making me interested in this indicator after u made quite a few ripples here in TJ with ur analysis on nifty. Looks like u r the latest hotproperty of TJ .

Now to the real purpose of writing this post . i would like to ask u both What parameters to use for Ichimoku system when using it for Indian Equity markets. This 9,26,52 is not making much sense to me. Do u guys trade using these parameters only??If not While viewing Daily TF charts what should be the ideal parameters??I feel it should be 5,22,44. What do u think guys?? Can we play with the parameters or 9,26,52 is best in ur view??


Thanks
Vaibhav

 

[linkon7]

Hi

Now to the real purpose of writing this post . i would like to ask u both What parameters to use for Ichimoku system when using it for Indian Equity markets. This 9,26,52 is not making much sense to me. Do u guys trade using these parameters only??If not While viewing Daily TF charts what should be the ideal parameters??I feel it should be 5,22,44. What do u think guys?? Can we play with the parameters or 9,26,52 is best in ur view??


Thanks
Vaibhav

see post no 415

http://www.traderji.com/futures/30600-ichimoku-kinko-hyo-trading-system-42.html#post511158

 

[linkon7]

LOL, are you saying I have a reputation to live up to? I did get quite a few comments about that, though. It was ichimoku spotted the support, and the other parts of my methodology that saw it falling that far from the 6,000 region.
With regards to your question, I have always used the default setting at 9,26,52. When I get the chance, I am planning on doing some experimenting with the 10,32,64 settings. The reason for this is that a normal cycle (Just a blanket average, nothing in stone.) is closer to 28 candles. In times past, I have found how effective the Bollinger Bands that instead of using the 20,2 settings, I used the 32,2 and 32,3. I wanted a complete cycle measured, and then catch the break when the cycle was over, and that was the object in my thinking. Also, sigma 2 made no sense, considering there was also a 2% chance of sigma 3 being hit.
I'm thinking of that same logic with ichimoku, but have not started, so I've derived no conclusions. Regardless of the outcome, 9,26,52 has worked perfectly, and I am really only looking for ways to fine tune my system.
5,22,44 would be up to you to configure. Someone told me Nifty is closer to a 20-candle cycle, and maybe that is where you got the 22 and 44 from.
I'm assuming you are looking at the 5 to possibly derive more signals. There are others in this thread that are quite astute when it comes to the ichimoku. My perspective is, and someone might disagree with me, and that is you don't want that first number too low, because you don't want false signals. That is something to consider when you crank it down too low.
Let me also be clear about something. BB and IC are distinct indicators. IC measures the flow, balance, and equilibrium of the markets. BB's measure the standard deviation of the market.

I read somewhere to use a MA that has acted as support / resistance for atleast 4-5 times. This will act as the intermediate trend and then we draw std deviation of 1,2 and 3 on this MA. Prices have to retrace after hitting the STD 3 to test the MA before resuming the trend. A bit of a modification on this is to shift the BB 3 bars to the right. This has a good effect as BB is designed to encompass the bars and by shifting it 3 spaces... we dont let react to sudden change in volatality. By the time price manages to come out of the band it has completed one cycle most of the time.

Best thing is this method compliments ICHI in terms of methodology. It is the perfect fading trade while ichi is a pure trend following setup...

 

[4xpipcounter]

I agree 100% with you here. It would be nice if they had such an indicator as the MA / SD combination. I've experimented with that in the past, but I'm sure you know the SD formula is quite involved, and I can't even use a spreadsheet to figure the right answers.
BTW, nice looking chart.

I read somewhere to use a MA that has acted as support / resistance for atleast 4-5 times. This will act as the intermediate trend and then we draw std deviation of 1,2 and 3 on this MA. Prices have to retrace after hitting the STD 3 to test the MA before resuming the trend. A bit of a modification on this is to shift the BB 3 bars to the right. This has a good effect as BB is designed to encompass the bars and by shifting it 3 spaces... we dont let react to sudden change in volatality. By the time price manages to come out of the band it has completed one cycle most of the time.

Best thing is this method compliments ICHI in terms of methodology. It is the perfect fading trade while ichi is a pure trend following setup...