Ichimoku Kinko Hyo is a versatile and a powerful indicator most suitable for trend trading. It was developed by Japanese trader Goichi Hosoda. It uses some tough Japanese words and terminology that makes this indicator appear complex and difficult to master. Nothing can be further from the truth. This indicator is simple to master and use in trading. Watch this one hour video tutorial that explains the basics of Ichimoku Kinko Hyo indicator.
The most important thing when trading with Ichimoku Kinko Hyo is the understand the different lines that are used in this indicator. Ichimoku Kinko Hyo in Japanese means looking at the chart for equilibrium. The following lines are important:
- Kijun Sen
- Tenkan Sen
- Chikou Span
- Senkou Span
Don’t get intimated with the difficult Japanese names for these lines. You can also watch this Ichimoku Kinko Hyo Day Trading System video tutorial!
Basically this indicator is used to measure price momentum and areas of support and resistance. For example, when price is above Senkau span, the top Senkau Span line serves as the first line of support and the second Senkau Span line serves as the second line of support. Kijun Sen tells you about the strength of the trend. If price is above it, there is a high probability that it will continue climbing. In the same manner if the price is below Kijun Sen, there is a high probability that price will continue falling down. Did you take a look at Forex Profit Boost indicator?
Now when you are trading, always take risk management very very seriously. Risk management is the most important thing in trading. Your risk should be small at all times. The trick lies in catching the big moves in the market with a small risk. If you can learn this trick, you will see an explosive growth in your account. Don’t try to catch the tops and bottoms. You can only get chpped by the market. First let the trend develop. When the new trend gets confirmed you should look for a low risk entry. This is how you are going to lose less and win more.
Always keep an eye on the fundamentals in the market. Keep this in mind. Fundamentals drive the technicals. When the central bank announces a major shift in the monetary policy expect the market to move big time until it finds a new equilibrium. Did you read the post on how Canadian Dollar fell amid concerns that Canadian economy is falling behind the US economy?