Samurai Channel

Hi i’m a newbie trader (2 years “trading”) and had been reading lots of texts and forums about systems and strategies. After a lot of demo an real trading with those systems I tried to apply and learn, I finally decided to try something I could develop and fully understand the logic and that’s how the “Samurai Channel “ was born.

This system is based on the well known ICHIMOKU indicator as I have noticed it gives you very clear picture of the direction of the market. But of all the components of this indicator I only used the Kijun-Sen as it is also known as “Standard Line or Base Line” and is a level where the market price tends to always get close to it. One thing to be clear is that this system as it could be automated (I am testing an EA I would provide after a few more tests), I prefer to trade manually as the trader’s experience and risk appetite varies.

I have been testing this system since last May, making some adjustments until I happily started to get, for me, nice numbers, the best results in my short trading experience. Last month t got around 550 pips.

I decided to share it with this community of trader because I have learned a lot from here and would like to give back something others could find useful and improve it.

I really hope we can make the best out of this idea.

One thing I would like to add is that I have a 8-6 full time job and I might not be as fast as I would like answering any question, thanks in advance for your patience on this matter.

Trading Setup

TIMEFRAME: 4H, 1H, it would depend on your trade style and risk acceptance. The higher the TF the bigger the stop loss would be. (I have seen some daily charts and look good, but right now I’m out of that TF). Also for the fast paced trader, it could work on 15M TF, feedback on this would be great.

Pairs: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/CHF, EUR/JPY, GBP/JPY, EUR/AUD, EUR/CAD, USD/CAD.

Indicators:
Main:
Three - 21 EMAs applied to: High / Close / Low  from now on, “The Channel”
Ichimoku (34,34,34): only showing Kijun-Sen  from now on “KS”

Also consider:
Daily Pivot Points / Important SR Levels (Could serve as taking profit / SL setting also)
Also might add some trend lines to reconfirm entries / reentries.

Trading Rules
Altough the strategy has been doing well on its technical approach, I encourage to be alert for fundamental data that might affect the price action in the short term.
Note: the channel is used as a filter for ranging markets, I recommend to always watch the slope of the CHANNEL.

Enter long:
1.- KS Break: When last bar closes above the KS, previous bar must close below this line. You can also be more conservative by:
a. Wait for a retrace to the middle of the channel if the KS is above it, this could give you less risk exposure, but also could miss some trades.
b. Wait for a second bar to close above the KS line.

2.- KS / Channel Rejection: if the price is above the 34 KS and the Channel and try to break down (wick might got through) but fail to close below it (34KS / 21EMA Channel, whichever is farthest away to the price action), then we wait for a trigger bar (Pin Bar, Engulfing) to enter in the direction of the trend.

Enter short:
1.- KS Break: When last bar closes below the KS, previous bar must close above this line. You can also be more conservative by:
a. Wait for a retrace to the middle of the channel if the KS is below it, this could give you less risk exposure, but also could miss some trades.
b. Wait for a second bar to close below the KS line.

2.- KS / Channel Rejection: if the price is below the 34 KS and try to break up (wick might got through) but fail to close above it (34KS / 21EMA Channel, whichever is farthest away to the price action) , then we wait for a trigger bar (Pin Bar, Engulfing) to enter in the direction of the trend.

Edit: see post #53 for an example and better explanation.

Exits Rules (Still testing best method):
Option 1) Take Half Profit at nearest support/resistance (looking for at least 1:1 R:R), then move to BE and let it run for at least 2:1 R:R.

Option 2) Take half Profit at nearest support/resistance, trail stop the rest using Kijun-Sen.

Option 3) Fixed TP of at least 1:1 R:R.

These are methods that would fit on the various trading styles, i’m personally testing more the options 2 and 3., depending on the pair.

Risk Management: 3%-5%.

Stop Loss: so far I have been using 2 reference points:
Above or below KS and The bottom or Top of “The Channel”

When Long: I pick the farthest point between these two:
a.- 5 pips below the KS of the bar before the break.
b.- 5 pips below the bottom of the channel of the bar before the break.

When Short: I pick the farthest point between these two:
a.- 5 pips above the KS of the bar before the break.
b.- 5 pips above the bottom of the channel of the bar before the break.

I personally set a limit of 80-100 pips stop loss, if the setup is calling for more than that, I wait for next call.

Chart Explanation:
SL is the green line, put the biggest based on the two methods I have been using.

1.- You could have entered the break of the KS. But also waited for the retest or retracement to the center of the channel and the entered t the fourth bar after the break.
2.- KS break and also close below the channel.
3.- Rejection of the mid channel line: price tried to get through but failed and dropped below it.
4.- This is a very interesting trade, because the KS was barely broken (some could have enter long), but then you the next bar closing all the way below the KS and the channel, so entering short.
5.- Clear break of the KS and the channel to the upside.
6.- Rejection from the bottom of the channel, we go long after price action is confirmed.
7.- Break to the downside of the KS and the Channel for the next bar after the break, even if entering with the breaking bar the results would have been good.
8.- This is a trade similar to the number 4, but this time you have a second bar closing above the KS an went long, then realized that bar went on the other direction and broke the KS to the downside, you could do 2 things:
Close the long trade (with a minor loss) and go short, or wait for the long trade to develop (and get stoped out).
9.- This is another rejection of the channel, we entered after the big red bar that closed below the channel.

Nine / Ten trade in a week for the EUR/USD 1HR chart.

Be free to ask and comment, would be highly appreciated, always respectful i may ask.

Have a great day!


Another example for last week, now on 4H chart of EUR/JPY.

First trade entered on a rejection from the KS and closing below near the bottom of the Channel. Unfortunately was stopped out by a huge bull bar.

The second trade triggered by a break to the downside, got us a pretty nice profit with any of the exits methods stated above.


Hope you get this clearer.

Will try to post some history results tomorrow.

Thanks for sharing, please keep us updated on your setups!

thanks for your sharing.

Hi. Your system looks good and I will be following this thread. Just out of interest what times do you trade? I also have a full time job in the UK and find that by the time I get home the markets are running pretty flat with not many trading opportunities…

Thanks for you comments, much appreciated.

About the time of trading i mainly watch the charts from 10pm to 12pm (GMT - 4), to get some ideas about what’s the price doing around my levels of interest, but i rarely open trades at that time unless i see a great setup, bc i like to trade the US - London mix hours (i start looking for setups at 7am local time) , but that’s easier said than done (even trading from a smartphone or tablet).
I get some trades opened but miss a few others, but that’s until i can put an EA to the test. :wink:

In your case, you have the asian session, could get nice setups on JPY crosses. Also try 4H charts, need less time on screen and isn’t as slow as daily. Hope this helps.

Have a nice day.

Hi again, just to post a trade is currently open, taken this morning, but couldn’t post the chart through the phone app, but here it is.
I entered on the rejection of the KS, after the bar closed (1.2722), it had done it a few bars before (i was sleeping), so this was confirmation.
My SL was a bit above KS (1.2750, have to include the spread) and my TP on the near important support, around 1.2690.


Lets see how this one ends…

This trade just hit TP +32.

Now below, two trades for the night on AUDUSD and AUDJPY.



See you all later, have a nice trading!

Edit: SL on AUDJPY is 83.98, missed the spread when took screenshot.

So you do take trades even if the r:r ratio is not above 1:1? Or this trade was just a special case?

Thanks for your reply, I really try to get that 1:1 r:r as minimum, but sometimes i might close the trade earlier if i see some price action telling me so.

In this particular case was barely 1.14 r:r, sl 28 pips and tp 32 pips.

Both trades stopped out for a total loss of 65 pips. Both pairs were kind of choppy during the asian session and early London, but finally popped up in NY session and took me out.

So far -33 pips in 3 trades :frowning:

Week still long enough to get those back :wink:

See you all later.

Yesterday was out of trading bc of my job, but today at least got in one trade a bit late after the KS break.

SL: 35 pips, Tp: 50 pips



See you later.

Hi great work and i am hoping that you do well. i am on the same page as you are started demo about 18months now. thinking of going live early next year. some thing i’d like to ask you. what size positions are you taking and why?

sorryone thing i am battling with is ICHIMOKU indicator on MT4 i have a indicator called ICHIMOKU but it has three branches.
Variable value
Tenkan 9
Kijun 26
senkou 52
this is how it shows me. now i am confused.
when you said ICHImoku must only show kijun-sen and all must 34. its not showing by me. plz assist.

Thanks

Huascar,

You are on to something here. I ran across your strategy and quickly put up your indicators. I tend to scalp at smaller time frames but I do see the logic in the longer time frames. Attached below is a trade using your strategy with a 10 minute time frame. Target 10 pips, stop at 12 pips. I hit my target of 10 pips. I could have easily gone 20 pips if I had gone with two contracts with the second contract at a target of 20 pips and moving the stop to BE.

Please ignore the other indicators. I left them on my chart.

Thanks for your work. I will be studying your method closely. If you like I will post my trades, but I don’t want to distract from your strategy.

Greg



I caught the 9 pips on this 5 minute long.

Greg

Hi, thanks for your comments. Glad to know you are almost ready to go live. I’m doing a mix right now, i have a small real account and also demos for contests.
I use position of 0.01 lots o micro lots because i risk max a 5% of my account. If the exposure is low i might increase the lot to 0.02.

Hope to have answered your question and see you around, getting some pips.

As you said on your last paragraph, only show Kijun-Sen:

You put all the values to 34 and then in the colors tab, put to none all others parameters. Use the basic ICHIMOKU included in MT4, not custom.

Hope this helps.

Many thanks Greg for taking the time to try my system and i see you already got some profits, congrats.

I appreciate a lot your feedback on lower time frames as i don’t trade them myself but they could turn good to trade with the Samurai.

I encourage you to post your trades taken with the Samurai Channel setup as it will help us get it better and more profitable.

See you around!

Nice, congrats. I see on your chart you took it on the bounce from the upper part of the channel, good call based on the slope and the bullish engulfing bar indicating possible continuation of the up move.

Nice couple of trades. :wink: