Explosive Ichimoku Renko Trading Strategy How To Swing Trade Stocks Like A Samurai

TITLE: Explosive Ichimoku Renko Trading Strategy (How To Swing Trade Stocks Like A Samurai) CHANNEL: The Secret Mindset DATE: 2019-07-15 ---TRANSCRIPT--- If you are tired to study charts with overloaded indicators, and just want to trade price action with less stress and guessing, then this video might help you do that. I don’t know if you are familiar with Renko charts or with Ichimoku cloud, but let me tell you, those 2 techniques combined will give you some decent entries and will filter a lot of market noise. So, in the following minutes, we’ll go full Japanese mode and we’ll discuss about Renko and Ichimoku, and how you can combine these 2 approaches in a trading strategy. Before we continue, if you are new to the channel, make sure you subscribe, turn on the notification bell and leave a like to show your support. Renko and Ichimoku are one of the many traditional Japanese forms of analysis. Renko charts are an overlooked way of analyzing price data and charting markets. Renko charts eliminate the time component of trading and only focus on the price itself. Potentially, Renko charts can filter out a lot of the market noise and display the price in a much more organized way that is simpler to interpret. Conventional candlestick charts generate a new candlestick every hour, 4 hours, day, week or another time interval the trader chooses as his period setting. Renko charts, on the other hand, are not time-based and they don’t use candlesticks, but “bricks.” A trader might set 1 Renko brick equal to 10 points which mean that the Renko chart will show a new brick every time price has moved 10 points in one direction. For this strategy, we’ll use 100 points for one brick, because i want to eliminate the noise as much as possible. The second component of our strategy is the Ichimoku indicator. An Ichimoku chart is a trend-following system with an indicator similar to moving averages, which offers a unique perspective of support and resistance. I don’t like to plot all the components of Ichimoku, because it’s messy and a quite confusing, so i only focus on the cloud and on the lagging span. The lagging span allows us to visualize the relationship between current and prior trends, as well as to spot potential trend reversals. When lagging span is above the current price, this indicates that current prices are higher than previously, and indicates a bullish bias • When lagging span is below the current price, this indicates that current prices are lower than previously, suggesting a bearish bias • When lagging span is near the current price, this indicates a trading range The most important component of Ichimoku is the Kumo cloud, formed from 2 lines (span A and span B), which act as major areas of dynamic support and resistance. Here are the main 4 rules we will apply later in our strategy • the longer the price stays below/above the Kumo cloud, the stronger the trend is( so for strong and reliable trends, we want the price to stay above or below the cloud for long periods of time and we don’t want to see the price cutting through the cloud multiple times in a short period of time • When the cloud is wide, the expected support or resistance is strong. • When the cloud is thin, the expected support/resistance is weak. • The last important rule is that you should never trade inside the Kumo cloud. So when the price trades inside the Kumo, no matter if you anticipate that it will break in one direction, you must stay disciplined and wait for the price to exit the cloud. Now, when we apply Renko charts with the Ichimoku cloud, we get a very clean, clear and simple way to analyze markets. Applying the Ichimoku to the Renko charts but only using the 2 components that we discussed, Ichimoku cloud and the lagging span, will offer you a simple and effective trend following strategy. Here are the basic rules of this trading approach: • We use the 100 Renko brick to identify key support/resistance levels, to determine the market trends and to place our stop-loss and take-profit targets • We use Kumo cloud to determine the main trend • When the price enters the Kumo cloud and breaks its upper wall upward, we have a bullish trend • When the price enters the Kumo and breaks its lower wall downward, we have a bearish trend) • We can confirm our bias with lagging span, by following its position above or below the Kumo cloud. The most reliable opportunities appear when 3 conditions are met simultaneously: For buy entries a new green Renko bar appears above the Kumo could The Kumo cloud is green and wide And the lagging span is above the Kumo cloud And for sell positions A new red Renko bar appears below the Kumo could The Kumo cloud is red and preferably wide And the lagging span is below the Kumo cloud So let’s analyze this chart. These are the perfect market conditions, with green Renko bars above the green Ichimoku cloud, and the lagging span above the Kumo cloud. Look how easy you spot the upward trend. Now, I don’t know about you, but when I look at this chart, I have zero temptation to short the market. I can see so clearly that the trend is up, with greens everywhere, and all I have to do is to go with the flow and enter long. There are many long opportunities here: a possible buy around here, another one here, riskier because the market hasn’t corrected much, another one here, right about the previous support level, also confirmed by the lagging span, another entry here, after the market found support from the previous breakout level, and another one here after a small pullback. Remember that these are 100 point bricks, so this is similar to a swing trading style. Here is another example. Do you buy here? No, because the Kumo cloud is red. So don’t try to jump early in the trade. Do you buy here or here? Also, no. The cloud is still red. Here is when the first buy entry occurs. And yes, it was a losing trade, or a breakeven trade at most, because the market formed another green brick and reversed. Another long appeared here, and this one was a great one. Pay attention to the lagging span, which stayed above the Kumo cloud, confirming our bias. We have another buy opportunity here, riskier because the market didn’t record a significant correction. I personally like to see a correction of at least 2 or 3 bricks before re-entering. Here was another opportunity to buy, and the market indeed continued its direction. Let’s see how a short signal works on a tesla chart. So here, the downtrend begun, but the Kumo was still green, so you might say we waited a little bit longer to join the downward move. Here is when we had the green light to short the market and from now all you have to do is to manage the trend accordingly. We had another chance to reenter after a small pullback, and another one here. Other 2 short trades appeared here and here. All this time, the lagging span remained below the cloud and confirmed the trend. In real time, we have contradicting signals. So the price broke through the cloud, which is still red, and the lagging span also made its way on the other side of the cloud. So, at the time being, no short here for now. Now, let’s see how we deal with choppy and ranging markets. This looks…ugly and not tradable. First, here is my most important rule. If I see the lagging span that is going up and down though the cloud, I read this as market indecision, and I ignore the setup and search for better entries. Pay attention at the lagging span here, it broke up, broke down, stayed inside the cloud. It’s all a big mess, and this is not what a trend looks like. So, no trades here. Another clue is the Kumo cloud. I want to see consistent red, or consisted green. I don’t want to see the cloud changing its color often. Look here, we have red, green, red, green. Clearly the market is in indecision and if I see the cloud that is changing its color, then maybe it’s better not to trade this market at all. Also, the Renko bars. Look how choppy the market seems. First the Renko bars are unable to record higher highs or higher lows, or lower lows and lower highs, the ultimate definition of a trend. But they also cut though the cloud easily. So no signs of dynamic support or resistance from the cloud or from the Renko bars. So, pay attention to these filters because they can make the difference between a bad trade and a good one. Now, if you found value and learned something new, make sure you subscribe to our channel, turn on the notifications so you don’t miss future uploads and leave us a like to show your support. Until next time.