Ichimoku Trading System

Introduction to Ichimoku

• Ichimoku is a comprehensive trading indicator system that provides:
  • Entry and exit signals
  • Trailing stops
  • Trade filtering to avoid losses
• Initially, the system may seem complex and overwhelming but becomes intuitive with experience.
• Just like interpreting dental x-rays, understanding ichimoku requires learning to "read the signs."

Components of Ichimoku

1. Kumo (Cloud)
   • Two colors: Green for bullish signals, Red for bearish signals.
   • Indicates market trend direction.
2. Chiku Span (Lagging Span)
   • Often shown in purple.
   • Compares current price to past prices, indicating potential support/resistance.
3. Tenkan-sen (Fast Moving Average)
   • Shown in green.
   • Set at 9 periods.
4. Kijun-sen (Slow Moving Average)
   • Shown in blue.
   • Set at 26 periods.

Trading Rules

For Long Positions:

• Green cloud
• Green moving average over blue
• Price closes above green moving average
• Price closes above the cloud
• Chiku line (purple) above the price candle

For Short Positions:

• Red cloud
• Blue moving average over green
• Green moving average below price close
• Cloud above price close
• Chiku line above price candle

Strategies and Tips

• Follow all Ichimoku rules when starting out to minimize risk.
• Only trade when all parts align; missing one can invalidate a trade.
• Consider setting alerts to notify when price crosses moving averages.

Practical Examples

• Violation of Rules: Example of no trade if the close is below the green moving average, even if other conditions are met.
• Time Frame Variances: Different signals on different time frames might require different strategies.

Advanced Considerations

• Adjusting stop losses using components like Tenkan-sen, Kijun-sen, or the cloud.
• Understanding cloud thickness and steepness impacts decision making.

Further Learning

• Upcoming videos will discuss more on setting stop losses, interpreting cloud variations, and developing a trader's mindset.
• Engage with further content for deeper insights into the Ichimoku system.

These notes summarize key aspects of the Ichimoku system, highlighting its components, trading rules, and strategies for using it effectively. The system can be customized over time to suit individual trading styles, but beginners are advised to adhere to all rules initially for safety. Further learning opportunities are available for those seeking to deepen their understanding of Ichimoku.