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[pilgrim]

Hi Ian,
I think it is a great idea  to analyze a more common pair over this weekend. I am in for sure.
You will be pleased to know that I can now figure out  if the tip of the Chikou Span is left or right of price depending which side of the kumo cloud and price curve it is situated on the chart.
 I understood the under and over price terms.
 Since taking part in this challenge my confidence has grown. Thanks for all your time.

Cheers, Alan

[draco]

I would have lost $50 on that trade. My entry was triggered at 6.0900, and then the stop-loss was hit at 6.1600. But the daily chart is still bearish. That means my stop-loss was too tight, as usual.

I'm trying to understand why I tighten stop-losses too much. It's not so I can make a bigger trade (tighter SL = bigger lot size = bigger profits). I think it's because I worry about the reward-to-risk ration being above 1. The initial SL I had chosen gave me an SL of about 0.5, so I looked for another SL lower down.

So either I drop this reward-to-risk rule, or I stay out of trades where it is less than 1. Which is the best choice, I wonder ? Anybody ?

[Odie]

Ian,

Thanks for the compliment but it was you who lead me down the right path. I just had to think about what you had said. And it just made sense. it was such a cool feeling.

Simon

[Kumo Trader]

I would have lost $50 on that trade. My entry was triggered at 6.0900, and then the stop-loss was hit at 6.1600. But the daily chart is still bearish. That means my stop-loss was too tight, as usual.

I'm trying to understand why I tighten stop-losses too much. It's not so I can make a bigger trade (tighter SL = bigger lot size = bigger profits). I think it's because I worry about the reward-to-risk ration being above 1. The initial SL I had chosen gave me an SL of about 0.5, so I looked for another SL lower down.

So either I drop this reward-to-risk rule, or I stay out of trades where it is less than 1. Which is the best choice, I wonder ? Anybody ?

Draco,

That is a wonderful observation regarding risk/reward.  You will find that Vince doesn't really concern himself with the relative risk/reward factor in his analyses.  I've queried him on this myself and his reply is "If I'm going to lose, I'm going to lose horribly", which means that price must prove his analysis completely wrong if he is to exit a trade due to a stop-loss.  This means you will have trades where your TP is maybe 75 pips away and your stop-loss is more than 150 pips away.  This sounds counter-intuitive given the emphasis on risk/reward ratios in trading (which I still think are a solid consideration), but Vince does have a point that I tend to agree with. 

Ichimoku also provides us with very few losing trades over the longer term than any other system I have used or seen, which could be looked at as increasing our reward while minimizing our risk on a macro level. 

In the end, we should place our stop-losses where Ichimoku tells us to and then decide if the risk/reward ratio fits in with our own personal trading style.  You might find that, after trading with Ichimoku a while, you don't worry too much any more about measuring risk/reward since you are so confident in your analysis that the possibility of tripping your stop-loss is very remote.

Hope this helps,

Ian

[draco]

Thanks, Ian. I had a feeling you were going to say that.

Something I have to get into my head is that risk/reward considerations have no place in IKH analysis. They completely skewed my analysis in this last exercise, and that is why I got stopped out.

Up to now I wasn't sure if this rule belonged to the analysis part or not. I think I am going to put this rule firmly in the risk management stage of the trade. I will have to factor the risk/reward ratio into the decision of whether to take the trade or not, but I will not pay any attention to it before that stage. Maybe I'll ignore it altogether, after a while, but for now I'll just push it to the end of the trade setup process.

[GeorgeW]

Hello Draco,

My advice/ideas on SL:

1. Volatility SL - based on measurement of Volatility. I post an MT4 indicator. Similar to Kijun.
2. Best idea: Kijun.
3. Now... rpblem is that some pairs never touch Kijun in trend, some even stay above Tenkan (like these!!!), some bounce from Kijun, but then there are some that vilate Kijun frequently, but usually bounce from Kumo. For example, compare D1 GBP/USD with GBP/JPY. Huge, huge difference.
So here my advice is:
Look at the pair in trend in the past, observe how does it behave. Does it touch Kijun? Does it cross Kijun? Does it stay usually above Kijun, and it crosses it usually when trend reverses/ends?
Then, accordingly to what you see in the past behavior, you can really easily put your SL and trail it.
Ideas on trailing:
a. trail with Kijun at it's present level (under the candle) or 10-20 pips below it.
b. trail with Kijun at it's level just before present one (1 "stair" back) or 10-20 pips below it.
c. trail with Kumo - below it's closest Senkou
d. trail with Chinkou levels (usually 1 levele beck isn't good, must be 3-5 levels back, it depends on how many levels there are)
e. trail with bars - anything from 1-7 bars, depending on:
  - bar's hight (long bar - 1, short ones - 5-7, medium - 2-3 - all in proportion to the bars that are occuring now, so I cannot define how many pips is long bar, just compare it with recent bars)
  - currency pair (ie: for GBP/USD usually 2-3 bars is fine, even 1 will do, but try it on EUR/USD and you are out too aften)
  - the time frame you trade on.

Also, I think I wrote this somewhere before, but cannot emphasize enough:
DO YOU LIKE WHAT YOU SEE IN THE TRENDING CHART?
Example: I like how trends look on GBP/USD H4. But, when I look at USD/ZAR (South African Rand) on H4 - I hate what I see. So, what do I do if I really, really want to trade ZAR? I go on D1. Now I like the trends. If D1 doesn't look good either - I just don't trade such pair. What for? Adrenaline rush?

Definition of "LIKE" - a trend that respects Kijun on H4, and even keeps quite a distance from Tenkan, just sometimes coming back to Tenkan to take a "breath". This is what I call "decent trend".
Definition of "HATE" - a trend that contantly goes up, down, making a huge channel, keeps crossing Kijun and even violates Kumo. This is not so "decent" trend.

One of my mentors told me:
"Decent trends, decent living".

I hope this helps a little.

BR and many 

George

[Odie]

Ian,

I have to say the concept of Risk and reward ratios was the one point of MM. I thought was a little foreign to Ichimoku. I noticed it when I first started anaylzing with Ichimoku and I looked at your and Vince's examples. When I first that you were both risking something like 100 pips for a gain of 20 pips. It seemed so strange to me where most people would advise that you put in a risk ratio of 2 to 1. Some books even preached 4 to 1. The problem I had with those kinds of ratios is I felt it made the trader's greedy. Instead of listening to the "trend", they are listening to their wallets. 

If you asked most traders, which would you prefer, $400 gain or $100 gain? most guys would go for the larger without question. Also, when they set those ratios and "mechanical" stop loss and TP, they are trying to anticipate thats what the market will do. So already they have broken the two rules of anaylsis. Stay objective. Never go against a trend. I am sure there are a whole host of sins but those two would be enough to  kill most part-time traders. 

So setting a stop loss of 100 and a tp of 20 would seem strange to most, but if thats all the markets willing to give you, then you can either accept the terms or wait for next one and decide if it seemed more attractive to you. Besides, the most important lesson that Ichimoku taught me is you can have the best systems and strategies but without patience and an objective mind, you are already in trouble before you stay. You just dont know it yet. 

Simon

[sunman4008]

Hello,

Would anyone be interested in another analysis challenge?

-Manesh

[paulbooma]

hi Manesh

Congrats on the book, I look forward to reading it.

yes I would be interested in joining a new challenge.

[sunman4008]

Hello,

Great....We have to think of the prize......

Who else is interested?

-Manesh

[lex10]

Mr Patel,

Unfortunately I do not trade with forex, but if you have one to stocks i would.

[sunman4008]

Hello

The challenge can be for ANY instrument include stocks.   

Post your chart and lets go.   Start a new topic though.


-Manesh

[gerald20000]

is it possible to get those deleted images by admin up again? so at least some of us can make good use of these challenges.