Hi I am trader who started trading in 2014. I started to trade forex for living from 2018. So I started as a Discretionary trader*1
as most start. But now I am a fully Systematic trader*2 who use Quantitative analyse*3
Discretionary trader*1 - Discretionary trading is decision-based trading, where the trader decides which trades to make, based upon the information available at the time
Systematic trader*2 - System trading is rule-based trading, where the decision to make a trade is based entirely upon the trading system. System trading decisions are absolute and do not offer the opportunity to decline to make a trade based on the trader's discretion. If the criteria are met, the trade is taken
Quantitative analyse*3 - Analysis of a situation or event, especially a financial market, by means of complex mathematical and statistical modelling) to make trading semi-automated and fully automated.
Ok that is about me. So I developed a strategy and used for years to make consist profits. Even now my students use it updated me with results. So my aim was to make a strategy that newbie friendly and Simple. I love simplicity because I am a KISS Concept believer. Later I will post why simple things works than complex especially in financial market field.
Every strategy that I have developed is based on Impulse and Correction. You may think why? Ok I will explain this statement by using Dow Theory for you.
According to Dow, the mark ups are impulses and the accumulations are corrections. Impulses define rapid price movements in a specific direction. The price movements that occur in the opposite direction, leading to consolidations are corrections. But always remember that a correction can turn out to be an impulse. A price movement which initially seemed to be a consolidation after a strong uptrend can turn out to become a strong reversal. We just have to know, when this happens.
Let me break it down further. In a strong uptrend, the pullbacks are the corrections. And the trend continuations are the impulses. When a pullback breaks out of the trend, it can become an impulse in the opposite direction
Eliot saw the market in a different perspective, digging further into Dow`s rules.
What he saw was that, a small part of a moving market, or in other words, a lower time frame exhibiting a piece of the overall market movement in a larger time frame, would also abide by the rule of consolidation and trending. A consolidation in the daily chart would be in fact, a strong uptrend in the hourly chart. But, both time frames behave in similar market patterns.
This comes with relativity. Relativity in the sense of price movement. For example, suppose that you see a strong uptrend in the hourly chart, your basic instinct would be to buy. But switching on to the daily chart, you see that the price has reached an area of consolidation. Relative to the daily chart, the uptrend is not so powerful.
I think it is enough about impulses and corrections. Let’s go to Strategy Notes.
Ichimoku trading system
This is a good example of a semi-automated system. This system is very popular and widely used even by the trading firms. Popular to the point that even documentaries are created about this system.
Our system combines the Ichimoku with price action, into daytime trend trading. Day trading and trend trading are what we use, that does not mean this is useless if you are a swing trader. Having a creative mindset will guide you to develop your own system.
The success of a trader doesn’t depend on how complicated his strategy is. In the end it is down to a solid simple strategy combined with a mind-set. A mind-set which can wait until the right time to execute a trade, bear the losses, and be consistent.
You will see that in mt4, there are several categories of indicators like trend, oscillators, volumes and the custom. All the indicators under these categories are based on algorithms. Custom indicators are developed by traders based on the customized needs. You will find the Ichimoku kinko hyo indicator under the trend category.
The indicator is daunting at the first glance.
I do not going to teach you more about Ichimoku system. Because there are so many sources to learn about Ichimoku, even in this forum too. But remember those extra facts that I told you.
Ahaaaa… I forgot to tell why I use ichimoku for this strategy. As I mention above this is a good example for semi-automated system. Then this can apply as the Systematic part of our Strategy to make it simpler when deciding direction.
- If the price is below the cloud, it is a down trending phase
- If the price is above the cloud, it is an up trending phase
- If the price is within the cloud, it is a neutral phase
So this will our First rules when deciding Direction.
When Candles situated above the Cloud we look only for longs. When Candles situated below the Cloud we look for Shorts. We will not take any action when candles situated inside the Clouds
Below screenshot will help you to understand more.
Ok that is about direction.Now we need rules for entries.
We will enter for longs when breaking Bullish Flags, Rectangles, and Triangles. (Continuation or neutral patterns). Simply we can say when candle breaking established tops.
Most important rule is when breaking those tops there should not be any bearish twister in clouds. This is the part that combine impulse and correction. This rule here confirming us that it is possible to have a impulsive move with this breakout relative to previous impulse.
When breaking if there is any twister we will not enter for the trades.
You can watch below video for all entry rules. But I am not good in English when I speaking. So if there is anything that you will not understand just post here I will answer.
Use Price Action too when taking decisions.
I think I do not talked exits in that video. So exits are two types. One is can depend on totally with you risk reward ratios. So then it is static. Most time I use this method to exit my trades.
Next one is Dynamic. It means exit can change when market change. So I used to try many methods. But you can have best for you.
As we riding a impulse we can use momentum lose to exit as using Heiken Ashi or Divergence. But this is not best.
Do not risk more than 1% for any of trades. Because in this game most important is to protect much capital. So you cannot risk more. You should reward more using less risk. Of course it is easy when you doing trend trading. This strategy also build for that, less risk high returns. Always remember reward will gain from movement that has no control by us, but risk always can control by us. So trading is not about markets. It is totally about you. There are pretty good edges in every market with any style. But most important is how you control Risk management.
Ok will discuss further more in future. I will attach some of my student’s screenshots to make you smart in this strategy. Because you can study them and learn.
As I told earlier I am a systematic trader. So I really think about automations. Unfortunately we cannot fully automate this because half of strategy is discretionary. But we can semi automate this.
When you find a strong established tops or bottoms you should wait for breaks. So I made a little tool for you. That will alert you when your trend line (Angular or Horizontal) break by candle close.
So that will help you to make this semi automate. If you find establish bottom or top just draw a trend line. This will alert you when it breaks by sound alert or giving you a email or push notifications for your smart phone.
FuturePips Trendline Break.ex4 18.99KB 84 downloads
Ok go through all these. And tell me while you doing. This is not the best strategy but of course you can gain lot more potential. If you can get experience from this you can go next levels by your own. This is a simple step. I made this to improve Money Managements and Psychology of my students while earning profits. Because this is very simple you had not much to think about edge. But you have much think and control your emotions. This will practice you that as always say while making money. That is the most important. We all trade to earn not to watch. But success depend 80% on you. I can do only 20% by guiding.