Advanced system #19 (IKH-HA Strategy)
Submitted by User on August 18, 2011 - 10:40.
Submitted by Gary Sharp
FXPT - SharpForex
This strategy is based on Ichimoku Kinko Hyo chart trading method, and combined with the ichi360 Monitor and Heiken Ashi candlestick chart method.
Anyone not familiar with Ichimoku Kinko Hyo can visit http://www.kumotrader.com/ichimoku_wiki/index.php?title=Main_Page for a comprehensive introduction.
The ichi360 Monitor can be downloaded at http://www.ichi360.com/?p=1594 free of charge. Other indicators listed below are part of the MT4 package.
If you are not able to spend the whole day at the screen, and want to be able to set-and-forget, the IKH_HA Strategy provides a good solution PROVIDED you also employ the use of a trailing stop.
Timeframe: 4 hour
Currency Pair: Any pair
Risk Factor: 2% of account balance
Stop Loss: Use Kijun Sen +/- ATR/6 buffer for trailing stop
Ichimoku Kinko Hyo 9,26,52
Multi Timeframe Indicator - ichi360 Monitor (Download: ichi360_Monitor_V2.zip)
Lotsize is determined by money management with risk limited to no more than 2% of account balance per trade. This is achieved by (1) calculating 2% of the account balance, (2) calculating the dollar value between the current price and the Kijun Sen – ATR/6 for a long position or Kijun Sen + ATR/6 for a short position, and (3) dividing 2% of the account balance by the dollar value in (2) above. The result is the number of lots that can be traded without exceeding the 2% risk factor if the stop-loss is hit. The “ATR/6” component adds a buffer to the stop-loss to allow for noise.
CURRENCY PAIR SHORT LISTING:
Once each day, or every 4-hours if you prefer, check the ichi360 Monitor for each currency pair to select suitable currency pairs for short listing. This is a step that MUST be performed before a currency pair can be considered for trading, and helps eliminate bad trades. The ichi360 Monitor MUST be 80% positive (13 or more up arrows) or 80% negative (13 or more down arrows) for a currency pair to be added to the short list.
TRADE ENTRY – LONG POSITION:
· Price candle MUST completely clear top of the Kumo and close above the Kumo;
· Tenkan Sen cross up above Kijun Sen;
· Chikou Span MUST be above the price curve and trending upwards;
· Senkou Span A cross up above Senkou Span B; and
· Heiken Ashi candle MUST be green.
TRADE ENTRY – SHORT POSITION:
· Price candle MUST completely clear bottom of the Kumo and close below the Kumo;
· Tenkan Sen cross down below Kijun Sen;
· Chikou Span MUST be below the price curve and trending downwards;
· Senkou Span A cross down below Senkou Span B; and
· Heiken Ashi candle MUST be red.
This is essentially a trend-trading strategy so whilst we want to cut losses short, we also want to allow profitable trades to run to their maximum potential. Exit is achieved in one of two ways:
· Trailing stop trigger, or
· Tenkan Sen / Kijun Sen cross in the opposite direction of the trade.
The following screen shot shows all the criteria that must be met in order to enter a long position. It also shows the results of a previous short trade that resulted in a 416 pip gain.
Ichimoku Kinko Hyo can appear to be complex and intimidating to those not familiar with this highly reliable charting system, but in reality it is an incredibly easy method to master. Once you become familiar with this method you may wonder how you managed trade without.
FXPT - SharpForex