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Ichimoku 18 hr trading strategy

 
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skucchal

Ichimoku 18 hr trading strategy

The lowest trade-able structure is a 12 hour (3 bar structure of H4) which can lead to a reversal of the 18 hour trend - represented by a 216 ema (shifted 24 forward) on a 5 minute chart.

Due to the slant (slope) of a moving average, there are 2 specific points along the 216 ema (on a 5 minute chart) worthy of trading.

Using the Csen function of Ichimoku, the 216 (18hr) moving average offers a 108 periods(9hr), and 36 periods(3hr) lookback points representing 50% of the trendline and 16% of the trendline.

The longer term trend (18 hr) only changes when current price crosses the 216ema AND the midway point of the 216ema (ie a definitive breakout) which ultimately leads to the ema itself changing its slope/tilt. Within a prevailing slope, TP points of 36 periods gives an easy 10-20 pips of profit.

The nice part about the strategy is that even if you are wrong, your loss is no more than a few pips even in case of a fakeouts, providing the most stable basis of trading - Heads you win, tails you don't lose much. A SAR setting of 0.003,0.018 provides added comfort for trailing stops on a position.

Since the loss potential is only a few pips, and profit potential is a minimum 10-15 pips, the strategy has a positive expectancy, and is always aligned with the daily trend.

Mon, 03/18/2019 - 3:26am
 
Jean-Francois

Extremely tight R:R - very efficient. i like the strategy too Keep posting - i'll keep reading.

 
Rookie

@skucchal, wrote
the 216 (18hr) moving average offers 108 periods(9hr), and 36 periods(3hr) lookback points representing 50% of the trendline and 16% of the trendline.

This has been mentioned before, I don't get the period to hour conversion? would you explain a bit?

 
skucchal

Ed...12 periods on a 5 minute chart = 1 HR. (12x5=60 min). Therefore 216 = 216รท12 = 18 hrs.
I use conversions for all my charts to ensure alignment.
To trade a Daily trend, I can trade a single bar on Daily chart /or/ 25 bars on M60 /or/ 50 on M30 /or/ 100 on M15 /or/ 300 on M5.
In the higher time frames Weekly 6 days /or/ 36 on H4 /or/ 288 on M30 (I actually use 324) so on and so forth.

So if I want to trade a weekly trend, I use ksen 36 on H4 with a 4 day slope as advance warning of a reversal. Within that 4 day slope I take daily trades, and let them go at 18hr crossovers.

The 216 ema fractal is very effective on a M30 giving a 4 day slope reversal as an advance warning of a weekly trend reversal. (216 on M30 = 108 hrs=approx 4.5 days).

On a very long term trend, 216 ema fractal offers a 216 day trade on a daily, or a 36 day structure on H4 (very close to the 30 day trend that Lindsay uses)

 
skucchal

If you're confused with why I use 216 instead of 200, it's my pedantic nature with numbers. 9 is a root number - like a fractal. Every multiple number of 9 totals to a 9. 9,18,27,36,45,54,63....216....324.(3+2+4=9). I can then use this across different time frames for an ICHIMOKU chart with 324 as the longest trend. 324 on H4=54 days(my highest trading unit)...going down to 324 on M5 = 27 hrs...or a daily trend.

My preferred trading structure, is weekly (324 on M30), and within that, I like to take daily trades. I'll rarely take a daily trade against the weekly trend (unless I am watching it or if the weekly trend is very mature, and I expect a reversal).

My lowest structure is a daily, (M5 chart), and the 18hr slope gives me advance warning of the safest lowest risk exit point in case I am wrong. Usually a daily ATR for AUDUSD is 70 pips, so it is easy to make 30-40 pips within a 18 HR structure....very consistently.

 
Rookie

What I am confused with is the link between time and charts the way you have them calculated. I am not criticizing you I'm just missing the link of how. In other words, I am having difficulty connecting the dots.

 
skucchal

Ed, I can't seem to attach images to direct messages....so here goes again...on the forum.

I am attaching 6 charts of the AUD/USD price action with 4 of them highlighting the price action of the last 2 days. Let us try to see where we could have caught a 2 day reversal using an ema (ema is much more reliable when using it across different time frames...but ksen/tsen is the MOST reliable). Also, here I am shifting my ema's forward by 25% to use the methods proposed by @zerohits (he uses 3x3 on a daily chart).

To capture a 2 day move, I use a 12 period ema on H4 (6 bars on a H4 = 1 day, so 12 bars on a H4 = 2 days). The 12ema identified the 2 day reversal at 0.7110. However, if I was identifying the same price action on a H1 I must change the 12 ema to 48 ema (48 bars on H1 - 2 days). The 48 ema on H1 also identified the reveral at 0.7110. Similarly while looking at the M30, I had to change the 48 ema to 96 ema (which also identified the reveral at 0.7110). See attached charts for Daily, H4, H1 & M30 each depicting the same price action.

So we can see that a 12ema on H4 is = 48 ema on H1 is= 96 ema on M30, with some very minor differences. These minor differences are actually eliminated completely if we use range midpoints (tsen/ksen on Ichimoku) which is why I like the Ichimoku methodology. This method allows us to zoom into a price action and identify a TP point well before the actual trend reverses.

Since we are talking about shifted moving averages, just for completeness, @zerohits uses a 3x3 which is also attached, indicating that AUDUSD is now eligible for shorts. In his methodology, he suggests a 3 period SMA shifted forward 3. AND...since we have mentioned Ichimoku, also attached is an hourly chart with a 24 hour 'lookback' (the trailing white line). In this, the lookback serves as confirmation that the 24 hour trend is down before we jump into a 2 day short. So once Csen crossed below 24 hour prices, THAT was the shorting signal - not the first time that prices went below the 2 day ksen. It is the equivalent of saying 1 day slope is negative, and prices are below the 2 day trendline.

Hence we have 3 independent systems confirming a AUD short 1)- @zerohits 3x3 indicating a 3 day short, 2)Ichimoku indicating a 1 day downward slope and price bar crossing a 2 day ksen & 3) price crossing a 2 day ema on H4/H1/M30.

Hope this clarifies. If not, please let me know...I'll attach some more examples. If you are familiar with a different time frame, let me know and I can elaborate with time frames that you are comfortable with.

AUDUSDDaily.png AUDUSDH1.png AUDUSDH4.png AUDUSDM30.png AUDUSDDaily3x3.png AUDUSDH1_2 day ICHI.png
 
Rookie

@skucchal, WoW thank you very much for taking the time with these posts. The two posts above about your math logic did the trick, I can now connect the dots and understand where you're coming from.

The images a great as well, I am a more visual person than a math person so so I'm thinking. Did you notice the specific candle pattern which can be used to confirm each reversal?

 
skucchal

Ha Ha....yes of course Ed...but I actually prefer a favourite indicator of yours that I did not draw on this chart.......a Bollinger Band 50 with SD of 1....which gives me (on a M30) an excellent place to book profits and take shorts from a daily high.

Going back to time frames...50 on a M30 is a good proxy for a 25 hour(daily) Bollinger band....and provides excellent daily high & low points. When the entire 30 minute candle closes within the Bollinger Band High, it gives an excellent high probability short - like a stretched rubber band that has to snap back to a daily low again....

But thanks for your questions....I do appreciate it....they force me to clear up my thinking - which is a pre-requisite if I have to express myself clearly.

 
Rookie

Thx, yes the bands are my fav with the CCI, each in conjunction work harmoniously. I use the 10 periods for lower time frames and 20 periods for 4h and above. I have not experimented past that. Reversal trades are very easy to see and confirm with this pair.
What I and I feel myself and most traders fail to make the best use of is the divergence when CCI and the bands are not in agreement. Lately, this is becoming a more and more frequent occurrence. Two weeks ago I caught one of Norma's Divergence Corollary and hade my best day ever, a 24% gain then last week I missed one on Gold and lost almost 4% not once but twice.

So I got sidetracked again, while a reversal is easy to spot I am working on identifying continuations or trend trading. I am thinking that ultimately this is a more profitable way to go with less stress.

 
skucchal

You may try a 50BB (1SD) on a 30 minute chart for trend trading...together with a 36 period CCI (which was your gift to me) or a 36 period Stochastic - which is essentially an 18 hour trend as well (36 CCI on 30 minute = 18 hr).

The 20 period Bands can provide repeat/re-entry trades as long as the 50 period BB is trending.

I've used it for quite a while...see the attached as an example of EURUSD Short.

Good Luck!!!

EURUSDM30.png
 
Rookie

Nifty idea, but u'r chart much too cluttered for my taste.

 
afrikaans4all

Ichimoku is a very complicated indicator but I am sure very effective. Also too cluttered to my taste. I guess every indicator has its positives and negatives. Luckily there are many to choose from. I like the HMA indicator and fractals for the 2 bar reversal.

 
triguylm1

skucchal, 216 alignment, ties in very closely with swing trading numbers, notice how price retraces about 50% after the large price move 1 of the 4 day periods; also, on smaller TF for hourly bullish or bearish runs, the larger candle on the M30 chart will be followed by a fraction close to 50% retrace quite often, not all the time, but worth taking the trade.

I get it you run numbers all your life. It's part of the analysis. I thing that's great!

Keep posting.

Thanks

 
dakiley2

Very calculated, very tight R vs R. I like it! thanks

 
skucchal

Thanks Lindsay...I was a little perplexed with your comment on "1 of the 4 day periods" till I realised that 216 on a M30 is 4 days. So if price bars are above 216, we are looking at a bullish 3 day structure.

Also interesting that my 12 hour slope has a context that is 9 times greater (12x9=108...which is 216 on a M30... again a fractal of 9). Also, 24hrs x 9=216 which is a 9 day trend line on a hourly chart.

NICE!....thanks for the insight. Very helpful.

 
skucchal

Going back to my first post on this thread....Span 8h ksen 8h provides an even finer adjustment since the 8 hour ksen is a flat line and it is the first point of reversal of a 4 hour structure.

Accordingly, span 108 on a 5 minute chart, measuring ksen108 is an excellent scalping strategy.

 
arkilliantorses

As an active Ichimoku indicator user I will study this strategy closely and apply it. Thank you skucchal.

 
skucchal

....and if we want to fine tune the 12 hour trending strategy...try a Span 162 tsen 54. On a 5 minute chart, it provides a 12 hour shift in trend, and over a hourly chart, provides a 6 day shift in trend.

Longer term, on a H4, the same settings give us a 27 day slope - half the amplitude of a 54 day...a great place to book profits and pick up the 54 day trend again once the 27 day slope is in alignment with the 54 day trend.

 
FXGold54

Ichi is simply Awesome, The base strategies are great but there are so many ways to modify and tweak :)

I have several modified methods to trade it.

keep up the solid work

Allen

Tradeview id = AGold54

 
Ramone Manning

Great information thank you

 
skucchal

To further improve the RRR, it is better to use the same settings (Csen Span 108 crossing 216ema) on a 15 min chart...providing 54 hr(2 day) swings with the option of reviewing trades every 18 hours (5 minute chart).

Safest exit from a 2 day trend is Csen Span 18 crossing ema 216.

These settings will keep trades active for much longer, allowing greater profits especially when markets are trending.

 
skucchal

Building further on the 18 hour strategy, is a 2 day trading strategy for longer term holds. Here we need to use the same 'lookback' of 9 hours but measured on a 15 minute chart (so 36 csen on a 15 minute chart)..

LONG trades are when the 9 hour csen crosses above the historical 216ema (54 hrs) on a 15 minute chart, and vice-versa.

These settings are once again replicating the Ichimoku ratio of 1:6 (36:216). Uncanny but even for stocks, these settings work extremely well....especially on a daily chart. No doubt, there are a few whipsaws, but the loss is miniscule, but when the stock trends, it really trend well.

 
heloflyer.dc

This looks very interesting, I'll need to put some serious grey matter into learning this.

Thanks for sharing.

 
dbworrell

So trying to grasp the numbers in relation to the different time frames. So I see CCI and Stoc and white, yellow and purple links on the main chart
I am currently using a 50ema and 14ema, but not getting good winners

 
skucchal

@dbworrell. The 50ema was just an example used to correlate the different time frames. Which chart are you using your 50 & 14 ema on? If you are trying to follow the 18 hour strategy the way it is described above, try using a 54ema and 36ema on a 30 minute chart instead..AND use a 36 period slope (look up Ichimoku on the forums....or on my ICHIMOKU/9 day forum)....If still unclear, send me a direct message and I'll be happy to explain.

 
skucchal

I've come to a logical end of my search for a "system" & would like to end this thread with my last post on the 18 hour strategy.

The next higher trend for 18 hrs is a weekly (ema 300 on a M30). But an ema gives too many whipsaws so the best trailing stop loss for a weekly trending position is the lowest or highest of the ICHIMOKU Cloud (12,36,324) on a M30.

12,36,324 operates like a fractal. On a 5 minute chart, it gives me a daily trend (with 3 hourly swings), and on a M30, a weekly trend (with 18hr swings). The 12 Tsen on a M30 gives us a 6 hour trend line which can be scalped by using a minute chart (same settings of 12,36,324).

If the Csen is above the cloud low point (lowest of Span A & B) on M30, the weekly trend is up and long trades in line with the 18 hour slope work better...and vice versa.If Csen is in the cloud, it's a daily correction and a golden opportunity to take new trades in line with the weekly trend.

I feel comfortable with these settings - they offer me a flexible approach to a variety of trading styles.

 
burton

skucchal, great work, informative shares, thanks.

 
mehdivincheh

Ichimoku is one of the best indicator that I have seen so far