Lessons on Ishimoku: market entry and stop orders

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We already have an idea of the functions of the Ishimoku indicator lines. Knowing and being able to determine the moments of signals and the levels of support and resistance given to us by the indicator lines, we have come to an important topic in working with the Ishimoku indicator - how to enter the market correctly and determine the levels of setting targets and stop orders. Let's start with the latter.

Goals and stop orders from Ishimoku

Receiving a signal from a line for entry into the market, we need to determine for ourselves the level to which the price can reach during the processing of this signal and where to place a stop order, in case of cancellation of this signal. Let's look at examples.

Target and stop order when working on a trend

Figure 1 shows a fragment down-trend движения британского фунта в период 14.03.2008 — 16.04.2008 года, дневной таймфрейм. 28 марта мы получили сигнал от Тенкан Сен (позиция 1 — красный цвет) об окончании коррекции и к выходу из покупок. На следующий день цена пробила Сенкоу Спан Б и закрепилась внутри медвежьего облака (позиция 2 — синий цвет).

Figure 1. Example of determining the target for signals. Downtrend.

At this signal we open sales position, промежуточной целью которой будет низ этого облака Сенкоу Спан Б. Это обусловлено тем, что мы держим в уме возможность разворота основного движения и зарождения бычьего тренда. Однако, спустя день, Тенкан Сен Киджун Сен нарисовали «Мертвый крест» (позиция 2 – красный цвет), а спустя еще два дня мы получили двойное подтверждение «Мертвому кресту» в виде пробоя ценой Сенкоу Спан А и выходу цены из облака вниз, а также пробой Чинкоу Спаном графика цены (позиция 3 — синий цвет). Мы получили мощные сигналы на продажу, так как это произошло в медвежьей зоне, и move the takeprofit target even lower.

Calculating the target in such a way that the distance between the top (Low) of the wave, drawn by the Chinkou Span to the crossing point of the price chart, will be equal to the distance from this crossing point to our target. Alternatively, but only when the price has broken through a cloud, we can calculate the target, taking the distance from the top (bottom) of the wave to the middle of the broken cloud and measuring that distance in the direction of the instrument's movement. In our case it is 220 pips. In this case We set stop-orders levels first above the maximum of the wave, а затем за Киджун Сен и передвигаем их вместе с Киджун Сен. Уровни при этом определяем там, где Киджун Сен выходил в горизонталь (позиции 1.1., 1.2., 1.3. — синий цвет), на расстоянии 10-20 пунктов от него, понимая по определению, что это возможные уровни отката и их пробой будет свидетельствовать о смене тенденции.

We do the same in the case where we get trend continuation signal отскоком Чинкоу Спаном от графика цены. На рисунке 2 видно, что мы получили два сигнала окончания коррекции (позиция 1 — красный цвет) к восходящему тренду и входу в рынок с покупками пары:

a bounce of the price from the Tenkan Sena and the Kijun Sena;
a rebound of the Chinkou Span from the price chart.

and got "Three Line Signal".

Fig. 2. Example of target definition for signals. An uptrend.

При этом мы отмечаем, что сигналы сильные, т.к. произошли в бычьей зоне и подтвердились «Золотым крестом», сформированным через две свечи (позиция 2 — красный цвет). The purpose of our purchase in this case will be the distance from the start of the previous wave to the point of receiving the signal from the Chinkou Span. In our case it is 250 pips. Stop Orders In this case, we put initially below the Low wave (position 1.1.), and then move them to the Breakeven to the Kijun Sen level (positions 1.2. and 1.3. - blue).

Target and stop orders when working in correction

In general, to work in corrections, т.е. против тренда, — занятие весьма опасное. Практически никогда не знаешь, когда она закончится. Но все же при умелой и осторожной работе можно успешно извлекать прибыль и в этой ситуации. Рассмотрим на примере.

Fig. 3. Variants of correction and work with them.

На рисунке 3 имеем сразу несколько вариантов коррекции как к медвежьему, так и к бычьему движениям. Сразу бросается в глаза, что все они закончились на одной линии Сенкоу Спан Б. Эта линия (позиция 1 — синий цвет) и будет выступать целью коррекционного движения. Как же нам распознать начало коррекции и правильно в нее войти?

Выше мы увидели, как работать по тренду. Так вот, открою маленький секрет. Если цель по индикатору Ишимоку отработана на все 100% (позиция 2 — синий цвет), то неминуемо будет коррекция. И это еще одно уникальное свойство этого индикатора. Ну а a signal to start a correction we get from the Senkou Span A and Tenkan Sen, which turn against the trend. It is necessary to enter the market at the opening of the third candle and stop order put on the level below (above) the Low (High) of the completed wave, then moving it to Breakeven at the level of Kijun Sen (position 2.1. - blue), which can also serve as a level for setting a goal for the price movement in its direction.

The best option For such a development would be to place a pending order at the SSB level in the direction of the main trend with a stop order placed beyond the SSA or a few pips below the SSB, depending on the volatility of the instrument.

It should be noted that in the case of a breakdown of the Senkou Span B and the exit of the price inside the cloud or behind the cloud, we should closely monitor the behavior of the Chinkou Span in relation to the price chart. If these signals are in the opposite zone to the direction of the move, these signals will be weak and will not lead to a change in the trend.

Important!

It is worth paying attention to the following point. Never try to catch the entire movement from the first signal (change in the direction of the Senkou Span A). Wait for a complete confirmation of the trend signals of all indicator lines. Suppose you profit by only 50% of movement, but it will be a stable income. Personally, I always set a goal of 15-20 percent less than a certain, given the so-called market noise caused by various factors in the behavior of trading participants (reaction to news, economic data release, etc.).

Working inside the cloud

We touched on this subject in detail in lesson 2. (Issue 16). Working inside a cloud practically means working in a flat. When the price is inside the cloud, its borders will always be the targets. Stop orders are placed behind the cloud boundary opposite to the target.

Technical analysis when working with the Ishimoku

Well, now we know how to use signals from the Ishimoku indicator. But this is not all the secrets of working with the indicator.

The author of the indicator himself developed it as an addition to the candlestick analysis, so we will devote a separate time to this topic. But apart from that, according to my observations, when working with the Ishimoku indicator, the following are not unimportant interaction factors with wave and channel analysisWe will also talk about them later. Now I will share with you my experience and the secrets of technical analysis with the help of the Ishimoku indicator, but without the above-mentioned TA elements.

Parameters of the Ishimoku Indicator

As for all indicators, the properties of Ishimoku are set by the parameters of its lines. We have already briefly discussed it in first lesson (Выпуск 15). Правильность настройки индикатора — это главный секрет в точности определения тенденций на рынке и основа вашего успеха в достижении положительного результата. Уникальность индикатора Ишимоку состоит в том, что он показывает, какая ситуация была раньше, и какую реакцию мы увидим в будущем. Теперь немного подробнее.

The quantitative value of parameters A, B, C, specified by the author himself for the use of Ishimoku, respectively, are 9, 26 and 52 - this is the standard set of the indicator. The figures are taken from the following ratios:

On the daily chart:

9 — полторы рабочих недели, 26 — число рабочих дней в месяце (в Японии было 6 рабочих дней в неделю), а 52 – два рабочих месяца.

On the weekly chart:

Nine weeks make up about 2 months, 26 weeks make up a half-year, 52 weeks make up a year.

И как мы уже узнали, первый параметр — это Тенкан Сен, второй параметр – Киджун Сен, и вынесенный на указанное число свечей Чинкоу Спан, и третий параметр – Сенкоу Спан Б. Однако эти параметры вычислялись автором именно для недельного графика и подходят для работы на больших ТФ, for medium-term and intraday TFs they are not always relevant. Therefore, it is necessary to adjust the indicator for each timeframe separately by the trial method.

As of Ishimoku variables sometimes halved, i.e., 5, 13, 26. On the forums, there are recommendations for the following parameters:

for charts from 15 minutes to one hour: 15, 60, 120;
for charts from hour to day: 12, 24, 120.

I use the following parameters of the Ishimoku indicator:

for periods M5, H4, Daily and Weekly: 9, 26, 52 (standard values);
for the M15 period: 12, 36, 72;
for the M30 period: 15, 60, 120;
for the H1 period: 24, 72, 120;
for period MN: 3, 6, 24.

Everyone can customize the indicator for themselves. I set it up so that the data the indicator gives me, corresponded to the time interval in which the graph operates. I.e., working on intraday periods, we get intraday data: on M15 we get lines processing data for the last 3, 9 and 18 hours, i.e. intraday data, forming our idea of the prevailing trends on these time intervals. The parameters of the M30 and H1 charts are designed in such a way that they cover longer timeframes with their data and pass smoothly to the data of the medium term. H4 will give us prospects for almost half a month ahead. For the monthly chart I get data for the quarter, half a year and year. At the same time, without noticing it myself, I have obtained a very interesting result. In analyzing the graphs I found that indicator lines from period to period pass the baton to each other, confirming the correctness of the obtained level display. Let's look at the figures below and make sure of it. Consistently presented charts of the British pound on the following time periods: M30, H1, H4 and Daily (current situation).

With this picture in front of you, you can easily conduct a technical analysis of this currency pairThe following diagrams will help you to set orders and targets correctly (increase the page scale to the necessary size to clearly see the levels in the figures).

Based on the above, another secret of working with the indicator Ishimoku, is the need for technical analysis on all available timeframes. Without this, your success will only be local and temporary. With well-tuned charts with an Ishimoku indicator, you will be able to trade from the first signal on the intraday chart to the realization of the target on higher time frames.

How to do it

The main trend is determined on the large TF, from the daily chart and above.
We consider the medium-term outlook on the charts from H1 to Daily.
Possible developments on intraday charts are determined.

At the same time when carrying out technical analysis with the help of the Ishimoku indicator greatest attention should pay attention to:

Finding the price in relation to the clouds;
Finding the Chinkou Span in relation to the price and to the clouds;
Direction Tenkan Sen and Senkou Span.

After you have looked through all the timeframes In the order from the largest to the smallest, already in the reverse order you set resistance and support levels, which are given to us by the lines of the indicator. After performing these actions, you will draw a picture, by which you will be able to determine for yourself an approximate variant of further developments.

Moreover, the cloud that has been pushed forward in time, and the Chinkow Span that has been deposited backward, allow us to calculate not only the levels of future resistances and supports, but also approximate time of realization of trends and signal reception. This is another point of uniqueness and the secret of this indicator. Based on the study, we will be able to place pending orders for the implementation of our plans, which greatly facilitates the work of the trader, eliminating the need for his constant presence near the monitor screen.

In the 19th issue of ForTrader.org we will get acquainted with the interaction of technical market analysis based on the Ishimoku indicator with other elements of TA. The first in the queue will be the candlestick analysis.