Why I use default Ichimoku Kinko Hyo settings for trading
People ask me from time to time why I use the standard settings so now I will explain myself so that I will not repeat again.
I don’t recommend Ichimoku for newbie traders. Because it’s like driving a car without knowing how and why the engine works or why brakes work or why speedily turning around a corner is bad.
Basically, Ichimoku Kinko Hyo is a tool to quickly and dynamically see horizontal and diagonal support and resistance price zones in a price chart. It also helps you see quickly if the asset is in an uptrend or downtrend for the time frame you are viewing.
The name “Ichimoku Kinko Hyo”, which in Japanese translates to “Equilibrium chart at a glance” aptly describes the ingenious system.
I recommend for newbie traders to first learn how to plot out horizontal support and resistance zone/blocks and see how price reacts when it reaches those zones. And then learn about the various types of candlesticks and formations and of course, diagonal trendlines.
Anyway, if you’re like me, not only do I use Ichimoku, I also plot out the support and resistance levels from the highest time frame to the lowest time frame. And I also draw trendlines and formations.
Lo and behold, the default settings of Ichimoku also lines up with the lines I’ve drawn. The default settings work. When you alter the setting, you are “curve fitting” for the instrument, time frame, or environment. This will not work. There is no system that is 100% winner. You will have losing trades.
If you Google search for answers from top traders, you will see the same message like the following:
After much research and backtesting, Goichi Hosoda (the inventor) finally determined that the settings of 9, 26 and 52 were the ideal settings for obtaining optimum results with Ichimoku. He derived the number 26 from what was then the standard Japanese business month (which included Saturdays). The number 9 represents a week and a half and the number 52 represents two months.
The standard settings for an Ichimoku Kinko Hyo chart are 9, 26, 52.
There is some debate around whether or not these settings of 9,26,52 are still valid given that the standard work month in the West does not include Saturdays. In addition, in non-centralized markets that do not keep standard business hours like the Forex (which trades around the clock) some have posited that there may be more appropriate settings.
Nevertheless, most other professional Ichimoku traders, agree that the standard settings of 9,26,52 work extremely well and do not need to be altered. The argument could be made that, since Ichimoku Kinko Hyo functions as a finely-tuned, integrated whole, changing the settings to something other than the standard could throw the system out of balance and introduce invalid signals.
Manesh Patel, C.T.O. of E.I.I. Capital Group, has been using default settings for years. He is a veteran Ichimoku trader and has posted many educational videos on Youtube.
First day back on the job and I have gotten this message about 10 times and so I will deal with it here for future “askers”. As it has been floating around the world of FX Forums – there are indeed settings beyond the default 9 | 26 | 52 parameters. Though these options that are out there offer a great deal of customization and individuality – the standard 9 | 26 | 52 are like a “Swiss Army Knife”. - Vincent Hunt, Ichimoku Analyst | Forex Market.
Why are the Default Settings Wrong?
They aren’t. Saying that the default settings on the Ichimoku are wrong is the equivalent of stating that the toppings you got on your pizza is ‘wrong’. In fact, the settings that people have tried to apply on the Ichimoku in lieu of the defaults, are much more nonsensical than the defaults could ever be. - proofofresearch
BBands
Another thing, if the chart you are using doesn’t have Ichimoku, try experimenting with Bollinger Bands, they work almost the same.
Now if you’re like me where you trade cryptocurrencies or bitcoin for a living, Ichimoku is a perfect indicator for Bitcoin Leverage Trading.
