IMHO The explanation of the many " false breakouts" is very simple, but unfortunately long !
First : the Standard Ichimoku parameters :
The displaced 26 days moving average was based on the fact that at that time on the japanese market it was also traded on saturday which added up to in average 26 trading days in a month.
Question a) should we use the same parameters as now stock markets are closed on saturday ?
Question b) should we use the same parameters as now the Forex market trade 24/24 ?
Second " What are really Senkou Span A and Chikou Span ?"
Senkou Span A is a weighted moving average plotted ahead for 26 periods.
Roughly it is very similar to Hurst FLD (Future Line of Demarcation) where price is plotted ahead one half of the period of the cycle observed.
The crossing of the price movement and of the FLD allows us to determine a Price Target Zone.
BUT if we use a 26 periods FLD, this means that there is a 52 periods Cycle within price.
What if you use a 26 periods for Senkou Span A and that there is NO 52 periods Cycle in Price ?
Chikou Span is today's closing price plotted 26 periods behind, very similar to a FLD (Future Line of Demarcation) plotted back.
We could call it a PLD (Past Line of Demarcation)
Same reasoning as above "What if you use a 26 periods for Chikou Span and that there is NO 52 periods Cycle in Price ?
Last edited by parisboy; 11-26-2012 at 03:18 PM.
makes sense... Ichimoku is similar to Moving Average where signal is on MA crossings ... and such system generates lots of false entries.
have a feeling that similar benefits to Ichimoku indicators can be achieved from the use of this simple multitimeframe PSAR indicator -> Parabolic SAR (PSAR) indicator - trendchaser
this will act as support/resistance and mechanicly indicate trend ... will keep traders on the right side of the market.
what do you think?
Hi everyone thanks to kor for introducing this thread,my contributions are if we have thin cloud, a tenkan/kijun cross shows bullish signal above the cloud and bearish signal below,the chikou span acts as lead indicator breaking from the tenkan ,the kijun and free from the cloud.so a strategy will be when we start seeing a thin cloud it shows a path of least resistance, a breakout will happen.2 We look at cloud construction, market moving away from tenkan/kijun and we see advance thick cloud forming and we have flat senkou span A or B, price is attracted towards the flat senkou span helping us to determine a retracement or reversal.We also have the normal Tenkan and Kijun crosses which signals weak or strong signals above or below the cloud.The main thing for me is its an integrated system in which all the components work together to determine breakouts,reversals or retracements.Also watch out for the dojis, mainly on the higher time frame ,we have key support or resistances there.happy trading
Thanks for the link and this page. I have always had Ichimoku on my charts for over 3 years, whatever other methods I might use for actual entry and exit. In the past I have read probably most of the materials on Ichi available online. Here is my $0.02:
Pros: it's an easy one-glance context for market trends/bias. Above kumo bullish, below bearish. It also helps to identify some pretty obvious 50% S/R as that's how the formulas behind Ichi work. But if one is good at drawing FIBs or identifying support/resistance on naked charts, it's not that necessary.
Cons: It is a massively lagging indicator. I feel that saying that it's not a lagging indicator is very misleading, though I can understand why one who promotes his work and believes in this system would say so. At the end of the day, Ichimoku is really just a bunch of MAs with some slightly tweaked formulas. If those who like to bash indicators say MAs tend to lag, Ichimoku equally lags. But there are many people who can successfully trade MAs-based systems, so I would say that Ichimoku can equally work well in the right hands.
I have always loved indicators probably due to my start in trading and for a long time resisted perhaps subconsciously vanilla chart reading, thinking it's too dangerous. Now I'd spent probably enough time in staring charts and reading enough price action charts and materials, I have finally come to my senses and conclusion that the only REAL non-lag indicator is price itself, if only one learn to identify proper support/resistance, and supply/demand (a la Sam Seiden)levels. If one can get it right, it can be right and precise to the pip, at whatever timeframe, even in tick charts (I trade eminis too).
I still have Ichimoku on my charts, partly because old habits die hard, partly because it can be a handy reminder of overall bias, but I am gradually navigate more and more towards price action trading. It takes time, and takes experience, especially for someone who has been a long time trading indicator-based methods. But, not wanting to sound like a second-hand car salesman, I would say, trust me, that's the true path to identify excellent entry and exist, with truly minimum risk. Price moves from one level to another. What is needed is to identify those levels properly. Being able to find those levels and have the confidence to trade them would give one massive advantage, and much less risk than Ichimoku.
Good luck and happy hunting.
You can read about Ichimoku strategy here: Ichimoku Strategy
In this post there is a link to the relevant material in Polish -> Interactive Trading Setups Disscussion
Ichimoku expert shared his work results in the group, PDF attached
I've been using Ichimoku for quite of a time. I like it so far, but using it with harmonic patterns it is something that has never come to my mind. Have to try it