A common textbook "losing trade strategy" using the "Ichimoku Kinko Hyo"
Ichimoku Kinko Hyo uses components to suit market conditions,
and its effectiveness comes from using these parts appropriately,
what textbooks call
a trading strategy that considers the entire analysis will “lose”
or rather, it’s more accurate to say you’ll “become more prone to losses.”
Ichimoku Kinko Hyo is, as you know, a trend-following strategy.
Although its slogan says it can “predict,”
there is no way to predict with certainty.
That only means you can anticipate market moves in a forward-looking sense,
you cannot have an “absolute prediction” from Ichimoku Kinko Hyo.
It’s not that it’s impossible,
but the degree of hope is more modest.
There exists such an extreme, almost holy, belief,
and that is why Ichimoku Kinko Hyo has survived as a technical method this long.
In practice, ease of use is higher with
support/resistance and envelopes.
Because support/resistance is about judging the market with support and resistance lines,
it tends not to become a mechanical decision like in technical analysis,
(Those who have used technical analysis from the start sometimes interpret that
they’ve already “broken” just by drawing lines, which is a misunderstanding.)
By considering the market’s ambiguous states, you can use it effectively.
Envelopes work the same way,
envelopes consist of only two simple lines.
Using the centerline of the market as the pivot for parameter values,
you can judge the market,
making it more practical in real market conditions.
As for Ichimoku Kinko Hyo,
just using it in textbook fashion
will also trap you in simple market deceits.
This is because Ichimoku Kinko Hyo has become an absolute technical analysis.
It has become an absolute mechanical analysis,
so you’ll fall for simple deceits.
To avoid such naive deceits, only discretion can help.
In markets with such deceits, “faster analytical techniques” simply minimize losses,
so simpler indicators than Ichimoku Kinko Hyo will generally reduce losses.
This is why these side effects tend to cause misfires in the market.
That’s why it’s difficult to discuss the market.
To do something about them,
we should become well-versed in market patterns and use them.
Ichimoku Kinko Hyo is
for market patterns,
it uses and differentiates each technical component built into the Ichimoku Kinko Hyo.
In other words, Ichimoku Kinko Hyo should be thought of as
a fused technical analysis combining MACD, RSI, MA, and the like.
In reality it is not just a simple indicator;
it is better understood as a “technical analysis combined into one.”
If you think that way, you can choose to “exclude technicals” that don’t fit the market, right?
As a template file,
Cloud-only
Base line-only
and other variations of simple indicators can be saved
and loaded according to the market to use for analysis,
which will make Ichimoku Kinko Hyo much easier to use.
I believe it will be quite practical.
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