Ichimoku charting technique Introduction
Books by Alexander Elder is a classic in the world of trading, they rose more than one generation of professional traders. Even though Forex changes, evolves, certain postulates remain firm and, in my opinion, they should know each trader.
Method three screens Elder was developed back in 1985 but still remains relevant and popular among practicing traders. Perhaps the secret of simplicity and at the same time in the performance of the system. I hope this article will help make your trading system more profitable.
Ichimoku charting technique Description of the method of three screens
One of the most common mistakes a novice trader is not able to use a particular indicator, since now for each of you can find excellent examples of Pallas' cat, and a loop at one time period. The forums are often found expression of traders: "I work on an hourly time frame," "I've been using for the analysis of a 15-minute charts," with analysis of other, larger or smaller time series is performed.
This is wrong. In the market trend and there is always flat, and each of them is assigned a time slot. For example, the EUR / USD pair on a weekly timeframe is a trend that met the mild correction expressed in flat on the daily chart, and manifested itself in a downward trend on the local hour. Thus at three different time intervals, we have three different situations. Method three screens Elder teaches consider this feature of the market in its trading system.
In general, the method is simple, and we, for clarity, we explain it as an example of GBP / USD and Ichimoku indicator. Indicator Ichimoku I take not only because they use it in your trading system and well it has learned, but also because of the fact that in other examples of the method of three screens Elder he was never cited.
Ichimoku charting technique Description of the method:
1. A plea in his system for the analysis of the trading instrument two time intervals. And so that first period was optimal for the duration of the open position. In our case, it will be hour timeframe.
2. Select the second period is larger. In our case, it will be D1.
3. Analysis begins with the larger timeframe. Determine the trend for him, the key support and resistance levels. On the example of Ichimoku indicator is the cloud line and Tenkan-sen Kijun-Sen.
The figure shows clearly the upward trend of the day, with resistance levels at 1.6180, 1.6050. In a large time frame, the strongest support / resistance levels.
Ichimoku charting technique Playing with the trend of this period.
4. Next, we analyze hour timeframe. He have no explicit trend (consider indicator Ichimoku). Line Tenkan-sen-sen and Kijun interbreed, thus signaling to us that the couple chooses the direction. Note that level as 1.6270 support line.
5. The third screen in Elder is not a schedule, and method of opening the position, based on the testimony of the other two screens.
We formulate the rules for our case:
If the trend on a larger screen comes up, and less down, opening the deal only after breaking the previous local maximum in the upper term.
If the trend on a larger screen comes up, but smaller in flat, then buy from the level of support smaller timeframe.
It is this case is represented on the screen. Look, we could buy a pair of the level of 1.6270, which are Tenkan-sen and Kijun-sen and thereby be in profit.
If the trend on a larger screen comes up and the tendency of the smaller screen goes up, then buy at the break the previous high of smaller screen.
Same thing, but quite the opposite is true for the case when the big trend is down
Ichimoku charting technique Conclusion
In my example, I specifically examined the case with the indicator Ichimoku instead MACD, Stochastics, RSI, moving averages, which are regarded as an example, very often. The aim was to show that the method of the three screens - it's not finished trading system, and rules that its complement, regardless of what indicators you use in your work.
I began to use the three screens intuitively, even before I read about it in Alexander Elder. I just analyzed not only local but also the trend of higher period, and tried to run it by him, confirming the entry point on the smaller timeframes.
And you use in your trading system, analysis of multiple time series. Share what is, and as a whole achieved?
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