3 Profitable Ichimoku Trading Strategies

Hello this is Mark from Tradinformed.com and welcome to this video on a profitable Ichimoku

Trading Strategy. I’ve got on the screen at the moment the EUR/USD

on the daily timeframe and I’m showing 4 of the Ichimoku lines. I’ve left off the lagging

line for greater clarity and because I’m not using it in this analysis.

What I’ve picked here is a nice upward trend in the EUR/USD and this is what people trading

the Ichimoku cloud and system are looking for.

Ichimoku is designed to keep traders on the right side of the dominant trend and to hold

onto this trend for as long as possible, until it is clear it has changed direction

What I’m going to do in this analysis, what I wanted to do is find out how well Ichimoku

follows the trend and whether it can be traded on a simple automated basis.

To do this I’ve chosen 3 entry and exit strategies using the Ichimoku lines and I’m going to

see how well they perform just on a simple automated basis.

The first of these strategies is shown here, I’ve got the 3 entry strategies highlighted

here on the left, the price here is closing above the blue line (the base line) and this

is the signal for a long trade, a short trade would be when price closes below this blue

line. Trading strategy number 2 is here, and this

is when the red line (conversion line) crosses, in this case, above the blue line again (the

base line) and if it crosses below that would be a signal to exit the long trade and enter

a short trade Now the 3rd of these strategies uses the most

distinctive feature about the Ichimoku, which is the cloud and you can see here it is actually

when the price has closed above the Senkou B line which is the slower of the cloud lines,

so this is really showing that the trend has changed direction and we can now trade in

the new direction. Now the first 2 of these strategies closed

here and we can see that price has, for the 1st time, closed below the blue line and,

on the same day, the red line has also closed below and so we would enter short at this

time and close our long trade. We actually have to scroll along a little bit further

to see here which is when the price finally closes below the cloud. So we’re actually

holding onto this trade for 6 or 7 months and we really get the market to prove to us

that the trend has changed direction. I wanted to try these 3 different ways of

using the Ichimoku, the 1st 2 and ways of getting in fairly early to the trend and ideally

taken as much profit as possible for the relatively strong moves.

And then the cloud we’re using as a backstop really, for the really strong but slower moving

trades, to keep on board the trends for as long as we possibly can, until its proven,

at this point, that it has changed direction. So the analysis I’m going to carry out, I’m

using Microsoft Excel. And what I would firstly like to say is that I do have a new eBook

available, this is available in the Amazon Kindle Store and, along with Ichimoku, I have

included the Impulse Indicator, Value Charts, Money Flow Index, KST, Balance of Power

If you like trading chart patterns I have Harami, Tweezer Bottom and Double Top Patterns

in there. I show how all of these indicators and patterns can be programmed into Excel.

I give some tips and examples of how to use the indicators and there is also a Free Spreadsheet

that comes with the book and you can start off straight away carrying out your own analyses

using these indicators. So just to recap the trading strategy that

I’m looking at today. The 1st of these is the crossover of the Conversion Line above

and below the Base Line. This is a long-short strategy so immediately we have a crossover

we would reverse the direction of our position Crossover of the Base Line. This is Closing

Price above or below the Base Line. Also a crossover of the Closing Price above

or below the Senkou B line. This is the spreadsheet that I’m using to

calculate, to carry out the analyses, I’m considering them as 3 separate trading strategies

and you can see here that I’ve got all the calculations for the Ichimoku on here which

came straight from the eBook and has just been copied across and the spreadsheet I’m

using here is also available and there is a link on the screen if you would like more

information about this. So I’m using 3 of these spreadsheets to carry out the analysis

for each of the trading strategies and I’ve aggregated the results into a further spreadsheet

here. So what I’m showing here is Strategy 1, 2

and 3 profit and loss and our Capital. So I have the metrics here to show how the trading

strategy has performed over time and this is quite a long time period. I started here

in 1992 and the data goes up to the middle of December 2014.

I just want to add a quick look at the capital balance here. We can see that it is actually,

very surprisingly constant, all the way from 1992 to 2003. So it is showing not extreme

profits or extreme losses but a nice steady gain during that time period. Things slowed

down and the capital was a lot flatter until really the start of the financial crisis 2007

into 2008, 2009, 2010. Then the strategy performed very well indeed and the capital increased

significantly over this time period. For those of you who have traded since here which is

2010 11 the eurozone situation calmed down and Mario Draghi promised to do “whatever

it takes” the Central Banks really took over the currency market for a long time here.

We can see right at the end here we’ve had a big fall in the value of the euro vs the

US dollar. It remains to be seen in 2015 and beyond whether or not this is going to signal

a return to previous levels of volatility. But in any case we are showing here that the

strategy or the 3 strategies have all been profitable and have all performed quite consistently

well over a long period of time. My conclusions here are that these 3 very simple strategies,

very simple trading rules it would take no time at all for anybody to use these trading

rules in their daily lives. It would only have to be once a day to check the charts.

They can of course be improved, I say this for all of my videos, this is really a just

for most people just a start.Identify the major trend but I would say, from this video

that I’ve shown fairly comfortably, to my own satisfaction that Ichimoku is a good way

of identifying trends and can be simply and profitably traded on the EUR/USD pair on the

daily timeframe. If you would like more information about backtesting and using Excel, market

analysis and generally about the financial markets please go to: www.tradinformed.com