KUMO BREAKOUT System: Step-by-Step Guide to Mastering Ichimoku
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- Опубліковано 18 вер 2024
- Mastering Ichimoku Trading Strategies: Unveiling the Power of the Kumo Breakout
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Ichimoku Kinko Hyo, a versatile technical analysis tool, has gained immense popularity among traders due to its comprehensive approach to analyzing price action. One of its key components, the Ichimoku Cloud, plays a pivotal role in the Kumo Breakout strategy.
We will explore the intricacies of Ichimoku trading strategies, specifically focusing on the Ichimoku Cloud and the Kumo Breakout strategy. From understanding the components of the Ichimoku Cloud to implementing effective entry and exit strategies, we will provide insights into harnessing the potential of this powerful trading approach.
Understanding the Ichimoku Cloud and Its Components:
The Ichimoku Cloud, also known as Ichimoku Kinko Hyo, is composed of several key elements that provide valuable insights into market trends and potential trade opportunities. These components include:
Tenkan-sen (Conversion Line): The Tenkan-sen represents the average of the highest high and lowest low over a specific period, typically nine periods. It acts as a short-term trend indicator and helps identify potential support and resistance levels.
Kijun-sen (Base Line): Calculated in a similar manner to the Tenkan-sen, the Kijun-sen represents the average of the highest high and lowest low over a longer period, usually 26 periods. It provides medium-term trend information and serves as a stronger support or resistance level.
Chikou Span (Lagging Line): The Chikou Span is the current closing price, plotted on the chart but shifted back by a specific period, typically 26 periods. It helps traders assess the strength of the current trend and identify potential reversal signals.
Senkou Span A and Senkou Span B (Leading Spans): These lines form the boundaries of the Kumo, or cloud. Senkou Span A is calculated by averaging the Tenkan-sen and Kijun-sen values, shifted forward by 26 periods. Senkou Span B is derived by averaging the highest high and lowest low over a longer period, also shifted forward by 26 periods. The space between these lines represents potential support or resistance levels.
Implementing the Kumo Breakout Strategy:
The Kumo Breakout strategy is a popular approach that aims to capitalize on potential trend reversals and breakouts. Here's a step-by-step guide to implementing this strategy effectively:
Identify the prevailing trend by assessing the positioning of the price relative to the Kumo. If the price is above the Kumo, it suggests a bullish trend, while a price below the Kumo indicates a bearish trend.
Look for potential breakout opportunities when the price breaches the boundaries of the Kumo. A bullish breakout occurs when the price moves above the upper boundary, while a bearish breakout occurs when the price moves below the lower boundary.
Confirm the breakout signal by analyzing other components of the Ichimoku Cloud. For instance, if the Tenkan-sen crosses above the Kijun-sen, and the Chikou Span is above the price, it strengthens the bullish breakout signal.
Set appropriate stop-loss levels to manage risk. Traders can place stop-loss orders below the Kumo for bullish trades and above the Kumo for bearish trades.
Take profits based on price targets or key support and resistance levels. Utilize the distance between the breakout point and the Kumo as a guide for setting profit targets.
Ichimoku trading strategies, with a focus on the Kumo Breakout strategy, offer traders a comprehensive and powerful approach to analyzing price action and identifying potential trend reversals. By mastering the components of the Ichimoku Cloud, traders can gain valuable insights into market trends and improve their trading decisions. However, it is essential to combine this strategy with proper risk management techniques and additional technical indicators for optimal results. With practice and experience, traders can unlock the potential of Ichimoku trading strategies and enhance their trading performance in various financial markets.
I can’t understand why you don’t have more subs (like me). Your patient and detailed way of explaining this indicator is a credit to your channel. Well done. I like to watch your video on my iPad while I have my other screen on my laptop open. Good luck to the channel’s future.
Thanks for the kind words. Check out part 2 also released today. Check out my essential playlist. On the way to 100k soon :)
Insane that this kind of content is free....so many all over the net will give the first 5 minutes and then put the rest of the real valuable info behind some kind of signup for money or VIP on a discord/telegram. I kept waiting for the section of this video where he tried to get us to signup or send him money
Thanks for the feedback. You'll love the rest of my ichimoku playlist. I go over one more strategy (bounce) and show you how to filter out bad trades: ua-cam.com/play/PLa6XDmoqdrjGUklLkTLV0Tymnh0g1U8_U.html
Clearly explained and greatly understood..
More wisdom Sir.
Thanks for this information
Glady you enjoyed Aaron. Check out the ichimoku playlist. I go over ways to refine the breakout method, as well as go over the bounce trade which is one of my fav: ua-cam.com/play/PLa6XDmoqdrjGUklLkTLV0Tymnh0g1U8_U.html
thank you.
best regards from germany
Thanks Romans.
Clear and very well explained …. Thanks !!
Thanks Szuzeka. Make sure to check out part 2 I released today.
First Thanks, i love your Videos and i love Ichimoku Cloud! 🙂
Thanks Markus. Also check out part 2 that I released today.
Who needs to pay for a course when you find gems like this on youtube.
If my free info is good, just imagine how great my $5,000 course is going to be hahahahaha
thanks man, i was waiting for this! Your videos are so satisfying to watch, keep it up!
Thanks Seenpai! Also check out the other kumo breakout video from today.
thanks a lot sir, help for my winning trades
Happy to hear Yily! Check out my essential playlist to make sure your psychology and risk management is winning too.
love ichimoku thanks
Amazing research on kumo... May be goichi hosoda also didnt know this🙂
Haha. I've done a few deep dives on how to tweak the Ichimoku breakout and bounce trades for even more profit. Check out my playlist and lmk if you have any questions. ua-cam.com/play/PLa6XDmoqdrjGUklLkTLV0Tymnh0g1U8_U.html
Thanks about to watch them.
Thanks David! Hope you like them.
@@kevincortese7751 I did appreciate the transparency. I like data with real charts not hand picked. Great job
For sure David. Check out part 2. Don't want you to accept what I or other youtubers say unless give have evidence.
@@kevincortese7751 i did, I watched every minute of the videos you posted on IC
Hi Stang. Posted a couple new IC vids today. LMK if you have any questions!
Thanks very much.
Glad you enjoyed. Kumo breakout is great, but I actually prefer the Ichimoku bounce trade. A few vids about it on my playlist. Check out the first one here: ua-cam.com/video/S4B4Sozrye0/v-deo.html
kumo breakouts are not as simple as you have explained for example the tenkan and kijun both have to be out of the cloud and price close to both also the future kumo has to be thin in order for a valid breakout to occur in many of your examples neither is the tk or kj out of the kumo and close to price. it works best on the one hour if you are a day trader and if you use simple pivot points your tp can be conservative at r1 or aggressive at r2 conversely s1 or s2.i do not recommend a trailing stop . if you can achieve 50-60 pips on a day trade then you are doing well .i have a 78% win rate with this strategy .
Hi Wahidsadiq. Thanks for sharing your trading system and feedback. Where do you set your initial stop loss?
If you've seen my series on the Ichimoku bounce trade, you'll know that I love taking a profitable system and tweaking it to make it even better. I'd be interested in backtesting your constraints. In addition to my 7 rules, TK and KJ have to also be outside the cloud. I'll also experiment with your take profit system. I'll post a video when I have an update.
always under the kj and i look for at least 3:1 ratio .you can get at least 2 trades min per week depends if a currency pair is trending on the dailly .for beginners i recommend trading trends only as pullbacks are harder to master.the only way to learn is to have screen time and watch the ebb and flow of the market .there is no easy way .most people here will have day jobs so its not that easy to make money from the markets where over 80% retail traders lose money the pivot point strategy is the best out there(for daytrading ) and i also use the adx indicator which is good to see money flow .the atr is good also as it shows the trader the average number of pips the currency pair has moved in the last 4 weeks .hope this helps everyone your videos are great a real passion for trading and teaching ....
Amazing insights. In my backtest I'll set SL just under KJ unless you like to always have it .5ATR, 1ATR etc away.
Repeatedly I followed your Ichimoku videos to understand the system. I think it is working positively 75% +. Good excellent . I appreciate you for your valuable simpleway explanation. Is it possible to make algo . Please let me know. Thank you so much. Bless you.
Wow, that's an amazing winrate - higher than expected actually. Two words of caution. There will be several losses in a row. Don't abandon ship, throw everything away and look for a new system. On the other hand, don't get too overconfident and start risking much more than you should just because things are going well. I've never built an EA and wouldn't really know where to start.
Great stuff Kevin ... works great with stocks and commodities ... you become a very patient trader.
The kumo breakout really is versatile across stocks, FX, etc. You're right, if you're patient and wait for the full setup to develop, you can make a lot of money in the long run!
6:13 I would not have entered a long position at the breakout of cloud as that bullish candlestick would have closed in the middle of the uptrend with a huge stop-loss below the conversion line and baseline.
I would have waited until the end of the first pullback above the cloud to enter a long position at a higher low with a minimum stop-loss…. By that time the cloud would have given a bullish confirmation 26 periods ahead of the current price.
I agree. 6:13 was not a valid long trade because future cloud was red. I tend to favor the kumo bounce instead of the kumo breakout because it first pullsback like you said. Check out the second half of my ichimoku playlist for more about the bounce trade.
7:23 You would have lost that sell trade, because the lagging span was above the price and not below the cloud.
The lagging span must first cross below the price and cross below the cloud before a bearish candlestick breakout of the price below the cloud.
Once the lagging span crosses below the cloud; the cloud will turn red.
Hi Junior. You compare the lagging span 26 periods in the past to the candle 26 periods in the past. The lagging was below that candle. The cloud does not use the lagging span at all. The cloud turns red when (KJ+TK)/2 is less than (52 period high+low)/2
Thanks 🎉
You're welcome. Watch the next part of the playlist where I show you how to filter out losing trades. ua-cam.com/video/UQOKqahPBh4/v-deo.html
Thank you so much for this video. I was wondering the particular candlestick you were referring to with respect to the Chikou/Lagging span. Thanks again. SUBBED!!!
The lagging is just current price plotted 26 candles in the past. The idea is if current price is around where it was in the past, then price is likely in a range. If current price is much higher than the 26 periods ago, price has been trending up and if the chikou plotted 26 period back is below the candle 26 periods ago, then price has been trending down. See the following image: www.tradingview.com/x/17Il2sQ9/ Current price is exactly where the purple chikou stops 26 candles ago. On the top, you can clearly tell the two peaks are derived from the closes of the green candles marked. When you use chikou, you want to use the last CLOSED candle, not current.
@@kevincortese7751 Amazing! Brother, I appreciate you taking time to answer my question. As simple as it sounds, you've offered a missing piece in my playbook. Thank you so much.
Glad to help. A strategy is necessary but not enough. Whether you decide to go with ichimoku, price action, etc - most people fail because of risk mgt and poor psychology. Make sure to watch all 4 videos from my essential series: ua-cam.com/play/PLa6XDmoqdrjGjY9GHP3FOTbzyM6kSfkCx.html Once you're done with those - make sure to watch the rest of the ichimoku playlist where I go over ways to filter out losing Bounce and Breakout trades.
Hi great videos, what is the best time frame for this strategy?
Hi Simphiwe. Ichimoku can work on the 5M and lower but I think 15M and higher is better.
Thank you
thanks for the video, what trading technique do you use? I use the UFO technique from the nfc community.
I tend to favor the ichimoku bounce trade. You can check it out here: ua-cam.com/video/S4B4Sozrye0/v-deo.html
you are great . thank you very much for detailed explanations and a lot of example . thank you thank you. if ı earn ı will return for
Glad you enjoyed. Also check out the ichimoku bounce trade: ua-cam.com/video/S4B4Sozrye0/v-deo.html
What about a 5min or 1min time frames? Any back testing on those?
As a general rule, the higher time frame is 1 or 2 levels above. So for the 5M I'd want the 15M and 30M to agree and not really care what the 4H or daily says. When you start getting into the 1M, you really have to pay attention to spreads. You might hit a 2:1, but if you're paying 3 pips to market buy and you're taking many trades, that can really eat into your profit.
Thx for the quick response and all your hard work with the videos and back testing.
Hey, just to know if all conditions satisfie for Kumo breakout on a daily chart and not on 4 hourly chart, should we consider that breakout? Please advise.
The daily takes priority over the 4H. Just know that a breakout is only valid on that next candle. You can't wait days and take it whenever you want to it. You should also use TK or KJ on the daily for your exit. I personally think the daily takes too long to play out and the stop is too big for my liking, but if it works for you go for it. It is low maintenance - you can just check the chart 5 mins before end of day and enter or exit your position.
if all set up is correct but the ahead cloud is red and i want long position so will i wait until it become green or completely ignore this trade?
Good question Samar. The breakout is only valid on that next candle, so you'd pass on it. However, you don't have to miss the whole move. This is where the next ichimoku setup comes in which is the bounce trade. This happens after the breakout and is a continuation. Check it out here: ua-cam.com/video/S4B4Sozrye0/v-deo.html
Can u do a video on best settings for 1m scalp? Im finally getting some good indicators judt needing to fine tune the ichimoku setting
I use Ich on the default settings. However, I'm doubtful that Ich or any other indicator would be profitable over a large backtested sample on the 1M. The market only trends about 40% and I worry you'd suffer death of a thousand cuts as the frequent ranges chop you up over and over again.
TradingView only offers a few months of 1M data, so I'd recommend MT4 backtesting several years that'll cover different market conditions.
if the last candle closed above the cloud and then the rest of the conditions fulfilled after that candle . would this be a successful breakout?
All of the conditions must be met at the same time the candle closes.
For example, at noon the 4H candle closes above the cloud but the slower moving average is still above the faster one. Two candles later the faster is now above the slower and all conditions are met. This would NOT be a trade. All conditions had to be met 2 candles ago. When the candle closes above, you check everything and either take the trade or wait for the next valid kumo breakout.
Note, I'm releasing a video soon about the Kij bounce where you can catch trades that the breakout missed.
Could you please name these line with their real name, because the colors are different on mt5
Hi DIY. Here is tradingview: ( ibb.co/xFTh1ZD ) and here is MT4: ( ibb.co/YtMhrMj )
Is this fairly accurate? Forex and Indices?
Hi Robert. Check out my follow up video on the Kumo breakout where I backtest it over 600 trades across all 7 major FX pairs as far back as TradingView has history. The results are impressive. ua-cam.com/video/UQOKqahPBh4/v-deo.html
You may also like the bounce strategy that goes hand-in-hand with the breakout: ua-cam.com/video/S4B4Sozrye0/v-deo.html
@@kevincortese7751
Awesome.
I'm demo-ing an automated tool starting today when it gives biy/sell signals baaed on Kumo breakout.
Hey Kevin does this work well with the ADX?
I just scrolled through and it looked like most of the good and bad breakouts fell around 13 to 26 on ADX (14/14 settings).
Not a thorough backtest, but at first glance it doesn't seem to be very useful in this case.
@@kevincortese7751 you the man! Thank you so much love your content!
Thanks for the encouragement RX. Check out my essential playlist. Indicators are great, but a strong mindset and risk management are just as important imho.
Good to know. I may add it to the list for a future backtest. Good luck.
can you do an kumo cloud end to end strategy
Next week I'm releasing my ichimoku bounce strategy. What do you mean exactly by the end to end strategy?
@@kevincortese7751 End to End” which means when the price enters a cloud from either direction and is going to head for the opposite side of the cloud, thanks for the reply and looking forward to learning more!
Kumo is another word for cloud and this is exactly what the kumo breakout is. For long it was either inside or below the cloud. On the first candle when it closes above you will go long if all the other factors are also long. In the same way for a short - previous candle closed in or above the cloud and then closed below. Go short on this first candle if all other factors also align.
It doesn't have to go in opposite direction. For example, price could be in uptrend, retrace back into cloud and then close back above cloud. We'd still be looking for a long kumo breakout signal.
Kevin, you are using the wrong length to measure the distance from the current candle - it has to be 25 candles from the current candle because, you are already using the current candle to measure from - this makes it 26 candles. Just my 2 cents
Thanks. When the candle is closing, I always look to the far right for the cloud color without counting.