Automated forex trading system based on the Ichimoku indicator. Expert advisor robot trader built for metatrader MT4. Ichimoku meaning in Japanese as ” one look” was created by Japanese newspaper writer Goichi Hosada.
Unlike statisticians or mathematicians in the industry this was a work of person who used his expertise and few assistants and created technical indicator that is so robust and strong in today’s trading. There is strong pipwinner system built around this type of trading and it compliments other trading systems in place. Take a look a the video here.
The Ichimoku indicator is used to measure short term time frame momentum along with areas of support and resistance as they occur in naturally. The standard Ichimoku is comprised of five lines:
— This is a line made up by using high and lows for the 7 to 9 periods. This can be interpreted as short term moving averages.
— This line is same as the above Tenkan-Sen but it consists of longer time frames. Many traders use cross overs of kijun and Tenkan as entry and exits points .
The cloud is made up of space between the Senkou Span A and Senkou Span B. Senkou Span A is calculated by subtracting : (Tenkan – Kijun)/2 and the Senkou Span B is calculated by (Highest High- Lowest Low)/2 over typically 52 periods.
The crossovers are used for entry and exits points.
— Lastly the Chikou span is created by plotting recent price movement twenty six periods behind the latest closing price.
Best Forex Indicator Combination
Before considering trading the foreign exchange market, you need to do your homework to see which forex indicators will work best for your currency trading strategy. Choosing the right forex technical indicators will make it easier for you to interpret data and make the best decisions for buying or selling currencies. Choosing technical indicators isn’t as simple as clicking a few buttons, but you also won’t need to spend all day managing your trades. Best Forex Indicator Combination
Before choosing which forex indicators will work best for you, understand the different types of indicators and how they are used. First there are trend indicators, which show three tendencies in price fluctuations; up, down, and sideways. Just as it sounds, trend indicators will help you implement your forex trading system by showing you the price trend over time.
Next there are volume indicators, which a forex trader uses to determine the interest of investors in the forex market. High volume generally suggests the beginning of a new trend, while low volumes may indicate that traders are uncertain or have no interest in the current market. The key to understanding your volume indicators is knowing when to act on what the data is telling you. Using volume indicator to execute your forex trading system is ok, as long as you remember that a rapid increase or decrease in volume could indicate a reversal, while gradual decreasing may just be held up by the rapid moves within the currency market.
Momentum indicators document the speed of currency exchange rates over time, while also tracking the strength (or weakness) of a trend as it moves over time. When using this forex indicator, it is crucial that you know that the highest momentum is registered at the beginning of a trend and the lowest point is registered at the end point. Interpreting data from forex momentum indicators, a forex trader will look for disagreements between currency exchange rates and indicator suggestions, which will tell you several things; Best Forex Indicator Combination
1. A directional divergence between currency rate and momentum tells you that a trend is weakening. 2. Currency exchange rates increase during weak momentum signals the final warning of a trend change. 3. Trend changes should be anticipated during sideways exchange rates and strong momentum.
Finally, we have volatility indicators that tell forex traders the size and magnitude of currency exchange rate fluctuations. There will always be periods of high and low volatility in the foreign exchange market, and these indicators will help you employ the right combination of forex indicators to turn a profit. Low volatility suggests that there is very little interest in the currency rate and lets you know that market is preparing for a big move. Markets with low volatility pave the way for breakout trades, which have the possibility of big profits.
Choosing the correct forex indicators that may be best for you is about finding the right combination of indicators that provide you with the information you’ll need to find success on the forex market. Avoid using too many indicators within the came category because they often provide forex traders with repeat information, rather than confirmation. Best Forex Indicator Combination
Trading Forex requires learning technical analysis for currency pair price. Many technical indicators exist that can be used for technical analysis. In the forex trading strategy presented here we use two main indicators and one more indicator that is used as confirmation for the price trend.
The two indicators that are used in the strategy are pivot point analysis and stochastic indicator. The confirmation indicator is the relative strength index (RSI). Let us see first an overview of these indicators and see then how are they applied together in the trading strategy to make decision on whether to buy or sell.
The pivot point analysis involves determining support and resistance level. The support level is defined as a level the currency pair cannot go below it for a large time period. Similarly, the resistance level is defined as a level the currency pair cannot go above it for a large time period. The pivot point analysis defines many levels at different strengths. The higher support or resistance levels the strongest level which means it is more likely that the currency price reverse direction at this level. This is the first indicator in our forex trading strategy.
The stochastic is an indicator that determines the degree of increase or decrease for a given period. The higher the value, the more the currency price increases over the period. The lower the value, the less the price is going. If the price is continuously rising over the specified period, the stochastic will be high for a large period and this is called overbought. Te reverse is true and will result in oversold condition. If this indicator is more than 80 % for large period, we say this is overbought condition. Also if it is less than 20% t is oversold condition. This is the second indicator that will be used in our forex trading strategy.
The RSI is like the stochastic but uses different calculations. It can be used to determine the overbought and oversold conditions. It is also used to determine the price trend. If it is more than 50 % the price is going high and the reverse is true. This is a confirmation indicator in our forex trading strategy.
The forex trading strategy given uses the pivot point analysis and the stochastic as the main indicators. The trader must first check the stochastic indicator. If it is high for long time (especially more than 80%) then it is overbought condition. Similarly, if the stochastic is low for long time(less than 20 %), then it is oversold condition. The trader must expect a reverse in the price when those two conditions are seen.
Once overbought or oversold conditions are seen on the price curve, the trader can see the pivot level at which the price reaches. The more the level the price reaches, the more likely that the price will reverse. For example, if the price is overbought and we see that the price reaches the R3 level or a higher resistance level, then a very strong probability that the price at certain point will reverse. The price also at this condition will change very strong which will make many pips.
The entry point of the trade at this forex strategy can be determined by the RSI. When the price is overbought or oversold and reached the highest pivot level (or break out that level) the RSI can be monitored to determine when to enter a trade. If it is higher than 50 %, the price is going high. If it less than 50 %, the price is going low.