Ichimoku discussion thread

[daveM]

I have been using Ichimoku n a renko chart along with fibonacci, some good results trading only breakouts



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[prism2]

Ichimoku definitely for higher timeframes. 1hr/4hr for intra-day trend trades. It tends to be sturdy on those two timeframes. Sturdy enough to execute off triggers placed on the 15m/30m for trend-following trades. It's always a bad sign when price pulls into the cloud on the higher timeframes... it ends up producing a choppy market on the 15m/30m.

 

[tinhat]

Someone mentioned these in another discussion just recently. I tried to find that post but couldn't. Anyway, I'd never heard of Ichimoku Clouds so did some late night youtube watching and I'm very interested. It really helps identify if a stock is in a trend and supposedly the strength of that trend.

I might use it to help validate buy signals and market condition (XAO). I bought a couple of stocks in the past few days that I got stopped out of fairly quickly and when I went back and checked them on the Ichimoku cloud it confirmed they were not in a clear trend (they were inside the cloud and not in clean air).

I also found tradingview.com which provides free web based charting with Ichinoko Cloud format with delayed live pricing, the ability to add watchlists and nice clean interface. I haven't really looked into it much beyond that. I also discovered that the web based charting program in Lincoln Indicators Stock Doctor also includes it.

I'd be interested to hear more from anyone who has been using them on a daily (EOD) basis and any observations.

ps: I haven't read through this thread yet. Will do so tonight.

 

[InsvestoBoy]

I've used them in the past, there isn't a lot of magic there if you look into how the lines are constructed.

Tenkan/Kijun Sen lines are the midpoint of 9/26 period high/low, i.e. same as the midpoint of Donchian channel of those lengths.
Senkou B is constructed similarly from the 52 period high/low and shifted forward on the chart in a similar but further shifted way to Bill Williams Alligator.
Chiku Span is same as the 26 period ROC or Momentum, but plotted as an overlay rather than separately as you'll see on Western technical analysis charts.

The 9,26,52 default parameters fit nicely into a weekly chart where 26w = 6m and 52w = 12m but that is not why they were originally chosen, and rather chosen for use on a daily chart. If you look up those original reasons (see below) you'll find it is probably wise to switch out those parameters/lagging.

The standard settings of are: 9-26-52. The base number of
the formula is 26. The common view is that the number 26
represents a standard Japanese business month included Saturdays),
the number 9 represents a week and a
half and the number 52 represents two months. Some hold
different views and says that the calculation of Goichi
Hosoda based on - among others - Moon cycles, as the
number 26 is the best approximate number to express a full
Moon cycle, the number 9 represents one and a half quarter
Moon cycle, and number 52 represents a double Moon cycle.

So there isn't much value in the originally chosen parameters and the construction of the lines themselves isn't any more magical than any other moving average, channel or oscillator using the same parameters and forward shifting. Maybe one valuable thing is the "kinko hyo" or "at a glance", all the stuff is presented as a suite in a single chart rather than as 5 different indicators in panes below the chart.

I bet if I presented each line as an indicator below the chart you would think it was silly.

A lot of Japanese technical analysis traders use it and so you will often see, especially in JPY crosses on FX markets and on the Nikkei index that the price will trade off the lines.

EDIT: You saw some of your trades got stopped out because they were in the cloud, but if you trade off Ichimoku system triggers you will still find plenty of "clear sky" trades that get stopped out. That is just the nature of trend following.

 

[cogs]

To each their own I guess, if it can help turn a profit for you, that's all you need.
I think for many it's hard not to get caught up in the eye candy, particularly of some ancient mysterious Japanese wizardry which I agree is not much more than a lagging MA to help spot overbought oversold which is bogus in itself.

But hey if you get return, that's great!

 

[Gringotts Bank]

A 'technique' is only a technique when it can be matched up with the appropriate sell signals and backtested profitably. Without that it's nothing. Whether it looks nice on the chart, whether it takes 10 lines or 10000 lines of code.... such things have no relevance.

The very first day I looked at a chart, I plotted a parabolic SAR and thought to myself, 'how good is this!'. Optical illusion. No individual indicator can be traded in isolation. If you use several of them to create a system, maybe you can find some good entries. Then you have to work out how/when to sell.

 

[snilson]

ic. never works..

 

[tinhat]

ic. never works..

Hi sn, can you give us any more insight into your experience and thoughts?

 

[Bernfeld]

I use Ichimoku with ADX and Stochastic. When I added these indicators to my strategy, my maximum drawdown decreased by 30%, and ROI increased by 14%. But in general, the yield on this strategy is minimal, about 1-1.5% per year.