Your Guide to Ichimoku Trading for Binary Options

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Good Choice for Beginners!
    Free Trading Education, Free Demo Account!
    Get a Sign-Up Bonus Now!

  • Binomo
    Binomo

    2nd in our ranking!

Your Guide to Ichimoku Trading for Binary Options

Ichimoku trading will change your mind about binary trading. Do not fear. It will change your mind in a good way.

The full name of this particular trading tool is Ichimoku Kinko Hyo, which is Japanese for “One glance equilibrium chart” or “Chart balance at a glance.”

This tool was developed by a man named Goichi Hosoda a Japanes journalist in the late 1960’s.

It gives the trader more data points than your typical candlestick chart. And any trader should desire more data points. You want more accurate trading information don’t you?

It makes use of four individual measure of price action. These can be used in individual indicators.

Or you can use them in combinations of 2,3, or 4. This will create a powerful and complete binary trading system.

What Makes Up Ichimoku Trading?

Essentially, the goal of Ichimoku trading or Ichimoku Cloud is to offer a quick look at the state of the market based on moving averages.

You can break this chart up into several components on the indicator.

Tenkan-Sen:

The red line on the indicator will be a 9-period setting by default. It will be the line closest to the price.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Good Choice for Beginners!
    Free Trading Education, Free Demo Account!
    Get a Sign-Up Bonus Now!

  • Binomo
    Binomo

    2nd in our ranking!

Kijun-Sen:

The blue line on the indicator has a default setting of 29 periods.

Chikou Span:

The Green line is the closing price for the most recent candle. This can be projected back 26 candles on the indicator.

It’s always behind the price by 26 candles. It’s resistance and support.

This is where the chart gets its name. Ichimoku Kumo is the always projected at 26 candles in front of the current price. It’s both resistance/support and a prediction of the future for the support/resistance.

How Do we Make Use Of These In Binary Trading?

This indicator allows you to see either the uptrend or downtrend or if the market is moving sideways (ranging).

The cloud is your middle line. If the price is below the cloud, the market is in a downtrend.

If the price is about the could, it’s in an uptrend. If the price is inside the cloud, then the market is moving sideways.

When the market is in a downward trend, look for the Put signal. Put signals are what happens when the red goes below the blue line.

Essentially, the cloud helps you to place stops and recognize when to be bullish or bearish. And this is excellent, since protecting your capital is the main battle you as a trader must face.

You can focus on candlesticks or price action analysis around the cloud. This will help you see if a decisive reversal or continuation pattern will take shape.

Simply put, above the cloud means look for buying entries. Below the cloud, look for temporary corrections so that you enter a sell order in the trending direction.

Conclusion:

Ichimoku trading should be used with other indicators to enhance your binary trading. You will sometimes find it’s too late for binary options on the Ichimoku trading indicator and have to search for other indicators.

Have you used Ichimoku Cloud in your trading? Has that helped you?

Let us know on social media! And, as always, don’t stop trading!

Ichimoku Trading Guide

Guide to the Ichimoku Trading System

The Japanese have contributed a lot to the Western world in trading. From Candlestick, Heiken Ashi charts, Renko and Kagi charts to the Ichimoku trading system. Considered to be one of the best trading indicators, the Ichimoku trading indicator is in fact a trading system of its. Roughly translated to English, Ichimoku Kinko Hyo, or Ichimoku for short, stands for Equilibrium of Price. The Ichimoku Indicator is one of the standard indicators that are available in many charting platforms. In this article, you will learn the various components of the Ichimoku indicator and how to trade the buy/sell signals it generates.

Components of the Ichimoku Indicator

The ichimoku trading indicator is made up of the following components

  • Kumo or Clouds
  • Senkou Span A and Span B
  • Chikou Span (or lagging span)
  • Kijun Sen and Tenken Sen (Conversion Line and Base Line)

The default indicator settings for the Ichimoku is 9, 26 and 52. The reason for using these values is based upon an ancient Japanese work week. The 9 periods indicate one and half weeks or 9 trading days, while 26 indicates a full trading month and 52 indicates two trading months. Bear in mind that when the Ichimoku indicator was developed, the average Japanese work week was 6 days.

The chart below shows the Ichimoku Indicator and its various components.

The Ichimoku indicator is formed with the following parameters.

Chikou (Lagging Span): This line merely reflects current price but shifted to 26 periods ago

Tenken/Kijun Sen (Conversion/Base line): The Tenken sen is the moving average of the highest high and the lowest low of the previous 9 periods, while the Kijun sen is the moving average of the highest high and the lowest low of the previous 26 periods.

The Tenken Sen can therefore be remembered as the short term moving average, while the Kijun Sen can be remembered as the long term moving average.

Span A/Span B: The Senkou Span A is plotted as the average of the Tenken and Kijun Sen, while the Senkou Span B is plotted as the average of the highest high and lowest low of the past 52 days. Both the Span A and Span B lines are projected 26 days into the future. The difference between the Span A and Span B is usually filled and forms the Kumo cloud. The Span A Span B lines can also be viewed as dynamic support and resistance levels.

Interpreting the Ichimoku Trading Signals

Each component of the Ichimoku indicator forms a trade signal in itself. The following section describes the Ichimoku components’ trade signals.

Chikou Span: When the Chikou Span is above price, the sentiment is bullish and when it is below price, the sentiment is bearish. The chart below illustrates this point.

To put it in another way, if current price is above previous price 26 periods ago, it is a bullish sentiment and if current price is below price 26 periods ago, it is bearish sentiment. When Chikou span is close to price, or ranging the market is considered to be in consolidation, or no trend.

Tenken/Kijun Cross: The Tenken sen and Kijun sen crosses are similar to a moving average cross. Refer to the chart below for the illustration. In this chart we notice how the bullish/bearish sentiments are displayed with the crossovers of the short term Tenken Sen over the longer term Kijun sen.

Price in relation to Kumo: Finally, when price is below the cloud, it reflects the bearish sentiment and when price is above the cloud, it reflects bullish sentiment. When price is trading in the cloud, it exhibits consolidation phase.

As we can see from the above explanation of the individual components of the Ichimoku indicator, they exhibit the market sentiment and therefore signal buy/sell opportunities accordingly.

Ichimoku Trading System – Putting it together

Now that we have an understanding of the various components of the Ichimoku trading indicator, it is now time to combine these individual elements to form the Ichimoku trading system. The checklist below should offer an easy reference for the trader using the Ichimoku trading system.

Ichimoku Buy

  • Price Crosses above or is above the Kumo
  • Chikou Span is above price
  • Tenken Sen Crosses above Kijun Sen

When all the above conditions are met, a buy signal is indicated by the Ichimoku Indicator.

Ichimoku Sell

  • Price Crosses below or is below the Kumo
  • Chikou Span is below price
  • Tenken Sen Crosses below Kijun Sen

When all the above conditions are met, a sell signal is indicated by the Ichimoku Indicator. Stops can be placed at just above the Cloud at Span A or below the Cloud at Span B. Some prefer to use the Kijun sen for trailing the stops, but at the cost of getting stopped out prematurely within the trend. It is therefore up to the trader to decide where they want to trail the stops.

Note that there is particular order for the signal to be triggered, as long as all the conditions are met.

The above two examples show Ichimoku trading indicator can be used to pick highly profitable trades. It is worth mentioning that there are no predetermined take profit levels. Therefore, Ichimoku trading system makes it ideal for capturing a most part of the trend. It can be used on any time frame and in any markets.

The Ichimoku indicator is best used in trending markets. The chart below shows sideways price action and as obvious, the Ichimoku indicator can be confusing. It is therefore best to not trade during sideways market.

Ichimoku Trading System – In Summary

To summarize, the Ichimoku trading system is one of the best and simplest of trading systems that works best in trending markets and works in any time frame. With due practice and patience, Ichimoku can trigger some very profitable trades when a trend is established.

Ichimoku Indicator for Binary Options Explained

The indicator I am going to talk about today is one of the most complicated and it’s often “feared” by traders because it’s hard to understand and it has too many lines which can give hard to read signals. However, I will try to give you a stripped down explanation, along with some deeper insights, and to show you just why I believe it’s important in making you a better trader.

Ichi Moku Kinko Hyo, translated as “one glance equilibrium chart”, is one of the trading secrets coming to us from Japan. It was released in the late 1960’s by journalist Goichi Hosada, after his use in covering the Japanese equity and futures markets. To be honest, it is a masterful piece of work. It makes use of four individual measures of price action that can be used as individual indicators or in combinations of 2,3 or 4 to create a powerful and complete trading system.

How to Use the Ichimoku Indicator?

The tool was developed in the late 1930 by a Japanese journalist named Goichi Hosoda. He spent the next 30 years perfecting the indicator before releasing it to the public so you can imagine the amount of work that went into this indicator. It is based on moving averages and it aims to offer a quick look at the state of the market: it shows if the chart is in equilibrium or not. Let’s get familiar with the components of the indicator. Take a look at the picture below:

Tenkan – sen: This is the Red line on the chart, it has a 9 period setting by default and it’s the line that stays the closest to price.

Kijun – sen: The Blue line on the chart, with a default setting of 29 periods (notice that 9 and 26 are also the settings of the MACD).

Chikou Span: The Green line on our chart. This is the closing price of the most recent candle projected back 26 candles on the chart. It will always be behind price by 26 candles and acts as support and resistance.

Kumo: This is the Ichimoku Cloud and it is always projected 26 candles in front of current price. It acts as current support and resistance but also tries to predict where future S/R may be.

Four Parts Add Up To Super System

The four parts of the Ichi Moku are the Kijun Sen, the Tenken Sen and the Senku Span (which includes a forward and backward looking component bringing the total to four). The Kijun Sen and Tenken Sen are both a sort of Average True Range. Their formula is the highest high of period X – the lowest low of period X / by 2. In terms of our analysis, they represent momentum both short and medium term. The Tenken Sen is typically set to 9, short term, and the Kijun Sen to 26, medium term (these are the same settings for standard MACD, coincidence? I think not). They can be used separately like moving averages to signal price action crossover signals or together like an advanced moving average strategy or MACD indicator for signal line crossovers. In the basic sense, if one of the lines is moving up the momentum for that time frame is bullish so bullish crossovers are a good signal to take. When used together look for crossovers of the two lines, the Tenken-Kijun Crossover, as well as price action crossovers to confirm trends and indicate stronger signals.

The Senku Span, otherwise known as the cloud or the Ichi Moku Cloud, is a simple calculation with immense implications. The two lines can be used separately or together, together is recommended, and represent support and resistance in a dynamic fashion. Span A is the sum of the Tenken and Kijun line divided by 2, Span B is the sum of the highest high and the lowest low of the past 52 periods, also divided by 2. Together they create an indicator that acts like a pair of moving averages and a Bollinger Band style volatility indicator. When price action is above the cloud it will act as a support target which ACCOUNTS FOR VOLATILITY. When price action is below the cloud it will act as resistance in just the same way; support may be found anywhere within the cloud, a break through the cloud indicates a strong change of direction. While price action is within the cloud the upper and lower edges may act as internal support and resistance, holding prices range bound.

Putting it all together, connecting the dots for a picture of profits, is not as hard as it may first have seemed. I am sure by now even the rankest newbies reading this are having thoughts of how to use the cloud to indicate trend, momentum, support and resistance while using the Tenken-Kijun Cross to pinpoint entries. In terms of analysis and trade decisions, start with the cloud. Is price action above, below or within? If within is it maybe crossing up or down? Looking at the two spans, Span A and Span B, is it widening or narrowing? Is price action moving away or moving toward?

How To Trade The Ichi Moku Cloud

So, we’ve discussed the elements of the Ichimoku, now let’s see how to make use of them in trading. The Cloud offers Support and Resistance but it also shows you clearly if the market is in a downtrend, an uptrend or if it’s moving sideways (ranging). If price is below the Cloud, just like in my picture above, then the market is in a downtrend. Price above the cloud suggests the market is in an uptrend and when price is inside the Cloud, the market is ranging. The Cloud is the main thing I use when it comes to Ichimoku; to be honest I deleted the Green line (set its color to “none” so it doesn’t show on the chart) and for some strategies I do the same with the Blue and Red. I am not saying these lines are not important, just that for my strategies I don’t use them. But anyway, let’s get trading: when price is below the Cloud, we are in a downtrend so we will be only looking for Puts. A Put signal is generated when Red goes below Blue:

For a Call price must be above the Cloud and the Red line to cross above the Blue. As you can see from my pictures above, the signals can be kind of hard to read and sometimes come too late for Binary Options; that’s why I use different indicators combined with the Ichimoku Cloud, without looking at the other lines. Keep in mind that this explanation about the Ichimoku is very basic and it doesn’t cover all aspects.

Ichi Moku Video Explainer

Why does Ichimoku Suck?

I believe that you cannot just pick up Ichimoku, read an article about it and start trading it successfully because it is a very complex indicator which has a lot of different ways of use. Like I said above, sometimes the cross of the Red and Blue lines comes too late and price reverses before your option expires and sometimes price goes to one side of the Cloud and then reverses, without establishing a clear trend.

Why the Ichimoku doesn’t Suck?

If you use it long enough you will understand it better and you will see that price reacts when it meets the Cloud. Because the Cloud is projected ahead of price, you can also get an idea of how price will move in the future. Of course, nobody knows the future and I am not saying that Ichimoku is your Crystal Ball but after all, our trades are predictions, we try to predict where price will be at expiry time, so any help we can get with this prediction is appreciated. I also like it because it is a great all in one system using momentum, price action, dynamic support/resistance and trend to determine proper entries.

The Cloudy Conclusion

I don’t expect you to love this indicator right from the start but I think you need to give it a chance. Put it on a chart and try to incorporate it in your current strategy and see if it helps in any way. Black out all the other lines and just use the Cloud, or leave them all on your charts; do what’s comfortable for you and what you think can generate more In the Money trades.

The bottom line is that this is a great tool. It incorporates long and short term indicators, momentum, volatility, support and resistance into an easy to read system any trader should be able to pick up. What I like about it is that you really don’t need anything else, it is truly a stand alone full service trading system. If you have any questions you can find us in the forum, talking about Ichi Moku and everything else trading.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Good Choice for Beginners!
    Free Trading Education, Free Demo Account!
    Get a Sign-Up Bonus Now!

  • Binomo
    Binomo

    2nd in our ranking!

Like this post? Please share to your friends:
How To Start Binary Options Trading 2020
Leave a Reply

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: