The Ichimoku Kinko Hyo System MT4 Indicator is a powerful momentum Forex strategy which is one of the most complex indicators in the Forex world. The Ichimoku Kinko Hyo System MT4 indicator is made up of 5 components: the Tenkan sen, Kijun sen, Senkou Span A and B as well as the Kumo (cloud). Getting signals and understand when to execute a buy or sell trade from this indicator can be difficult, especially for new traders. The Ichimoku Kinko Hyo System MT4 indicator has simplified this process by converting all signals from this indicator into a simple tradable format that all traders, no matter their skill level, can use.
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Ichimoku Kinko Hyo MT4 System Indicator – Strategy and Trading Rules
The Ichimoku Kinko Hyo System MT4 indicator consists of boxes and arrows. The boxes are arranged in rows of three and are colour-coded. Green boxes indicate bullishness, red boxes indicate bearish behaviour. There are also arrows that are colour-coded: red arrows for bearish bias, yellow for neutral bias and green arrows for bullish bias.
The best signals occur when all the boxes and arrows are of a single colour. Also, the indicator will show the probability of the trade occurring as predicted by the indicator as a percentage.
Ichimoku Kinko Hyo MT4 System Indicator – Long Entry Trading Rules
A long trade entry is made when the following setup is displayed on the chart:
- All three boxes are green, and there is a green arrow pointing upwards.
- The indicator shows bullish bias of at least 60%.
- Take the trade using the best possible technical entry parameters such as a trend line bounce or a bullish candlestick formation.
In this chart, we can see that the boxes are all green with green arrows, and the indicator states that there is 100% bullish bias on the currency pair, which is a signal for the trader to go long.
The technical entry is made on the trend line bounce. After tracing a trend line through three previous lows, watch for a candle bounce on the same trend line where the arrows and boxes have shown a bullish signal. This is the entry point for the trade.
Stop Loss and Take Profit Settings
The entry made at the trend line allows the trader to set very tight stops. The stop loss should be located a few pips below the support trend line.
The Take Profit point will naturally be at the next key area of resistance. Trade protection for the price action in the form of a Trailing Stop should be applied once the price action is in profit territory. There are no hard and fast rules as to where to set the trailing stop. This is purely at the trader’s discretion.
The trader may also decide to scalp off profits by closing trades manually when they are in some profit, and allowing the price to come back to the support line from where new long entries can be made. This works pretty well especially as most of the trades take a long time to move from one end of the range to another, as shown in our trade example.
Ichimoku Kinko Hyo MT4 System Indicator – Short Entry Trading Rules
A short entry is made when the following setup occurs on the charts:
- All boxes appear red, and a red coloured arrow which points downward also appears on the charts.
- The indicator shows a bearish bias of at least 60%.
- The trade is taken using a technical entry such as a price rejection at a trend line which caps the price highs.
In this example, a trend line was drawn across two areas where price action was capped at its highs. The entry candle followed immediately as the arrow and boxes gave the same signal (where you have the red dotted vertical line).
Stop Loss and Take Profit Settings
The entry made at the resistance line allows the trader to set very tight stops. The trader should set the stop loss above the resistance trend line as price is not likely to break above this line in the short term.
The Take Profit point will naturally be at the next key area of support. A trailing stop should be used for trade protection. Take Profit for the short entry is not fixed; it can be left to the trader’s discretion but must not be less than 2 pips for every pip risked.
Ichimoku Kinko Hyo MT4 System Indicator – Recommended Time Frames
Technically speaking, you can use the Ichimoku Kinko Hyo System MT4 indicator for all time frames. However, the shorter the time frame, you will see more fluctuation and possibly more whipsaw which may cause small losses that can eat up your portfolio quickly. We recommend that you use higher time frames like the 4H for better consistency.
How to trade with Ichimoku Kinko Hyo Video Tutorial
How to trade with Ichimoku Kinko Hyo System
Ichimoku Kinko Hyo MT4 System Indicator Download
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Leave us a comment below to let us know your thoughts on this indicator. If you like this indicator, you might like see other indicators that we have carefully selected that will help you in your trading journey.
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