A Trading Strategy using Ichimoku Clouds
Updated
This chart contains an explanation and breakdown of a trading strategy I've been following with decent success. The basic idea of the strategy is that in the few days following the event of a ticker meeting all entry requirements, there is likely to be a pop of at least a few %. By taking a long position when the conditions are fresh, we can hope to capture a nice move up and then take profit quickly, moving on to another symbol and repeating the process.
Just in the month of November 2020 I have completed over 70 trades with this system, yielding a win rate of 83% and average win size of 1.89%; during this time I grew the account by 20%. I created the linked indicator (soon to be updated) to help find the entries and set appropriate stops based on recent volatility. The basic method of finding entries on TradingView is to set up the screener with columns for Last, Ichimoku Cloud Conversion, Ichimoku Cloud Base, Ichimoku Cloud Leading Span 1, and Ichimoku Cloud Leading Span 2, plus whatever columns you would like to use to filter the stock universe you want to apply this strategy to. Then set filters in the following configurations:
1. Last crosses up Ichimoku Cloud Leading Span 1 + Ichimoku Cloud Conversion above Ichimoku Cloud Base
2. Last crosses up Ichimoku Cloud Leading Span 2 + Ichimoku Cloud Conversion above Ichimoku Cloud Base
3. Ichimoku Cloud Conversion crosses up Ichimoku Cloud Base + Last above Ichimoku Cloud Leading Span 1 (or Span 2, whichever yields fewer hits)
Flipping through the results from these filter sets with my indicator script on will show you potential entries for this strategy.
There is a lot of room to personalize the strategy to your tastes as well, such as how recently do cloud crossovers and conversion/base crossovers need to be or other ways to set the stop conditions. You can also modify the Ichimoku Cloud parameters, but I've been having good results with the defaults of 26 and 52.
Please feel free to let me know of any successes or issues you have, and I am happy to answer questions about the strategy or the indicator script. Thanks for checking out this tutorial! This information is for educational purposes only.
Just in the month of November 2020 I have completed over 70 trades with this system, yielding a win rate of 83% and average win size of 1.89%; during this time I grew the account by 20%. I created the linked indicator (soon to be updated) to help find the entries and set appropriate stops based on recent volatility. The basic method of finding entries on TradingView is to set up the screener with columns for Last, Ichimoku Cloud Conversion, Ichimoku Cloud Base, Ichimoku Cloud Leading Span 1, and Ichimoku Cloud Leading Span 2, plus whatever columns you would like to use to filter the stock universe you want to apply this strategy to. Then set filters in the following configurations:
1. Last crosses up Ichimoku Cloud Leading Span 1 + Ichimoku Cloud Conversion above Ichimoku Cloud Base
2. Last crosses up Ichimoku Cloud Leading Span 2 + Ichimoku Cloud Conversion above Ichimoku Cloud Base
3. Ichimoku Cloud Conversion crosses up Ichimoku Cloud Base + Last above Ichimoku Cloud Leading Span 1 (or Span 2, whichever yields fewer hits)
Flipping through the results from these filter sets with my indicator script on will show you potential entries for this strategy.
There is a lot of room to personalize the strategy to your tastes as well, such as how recently do cloud crossovers and conversion/base crossovers need to be or other ways to set the stop conditions. You can also modify the Ichimoku Cloud parameters, but I've been having good results with the defaults of 26 and 52.
Please feel free to let me know of any successes or issues you have, and I am happy to answer questions about the strategy or the indicator script. Thanks for checking out this tutorial! This information is for educational purposes only.
Note
For the last couple weeks I've been posting Ideas using this strategy to make entries near the close of every day to show how it works. As of this writing, we've had 7 winners and 2 losers for a 77.7% win rate. Since the minimum profit for these are 1/4 the stop loss, 75% would make for breakeven, but that assumes no extra gains whereas in reality most of the time the trailing stop will get at least somewhat more than the minimum and occasionally much more. So these 9 trades that have closed so far have been profitable, to the tune of roughly 14% (+32% overall gains, -18% overall losses)I think this is pretty good. The sample size here is too small obviously, but each day i've been closing more like 6-10 of these (only documenting 1/day here) which is approaching a potentially statistically significant sample. The results of the larger sample are very much in line with the numbers above: +25.7% in past 30 days, +21.7% month to date, +10.1 % since i started documenting via TradeStation Ideas.
Note
Going through just the public ideas (which have all been posted here and can be verified by anyone that i'm not using hindsight or whatever to highlight successes) the results so far are 4 losing trades out of 17 closed trades (2 positions currently still open). this represents a 76.5% success rate, which continues to be in line with what i'm seeing generally.
Note
currently setting the stop loss based on next day heikin aishi candle opens, using a wider trailing stop of 0.5 atr and shooting for a higher trailstop activation of 1.25
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