Hi guys, I am going to backtest a strategy which uses only two indicators which are
Ichimoku cloud and Parabolic SAR.
As a science-student especially in asian country, I can say that I spend about my entire life to study apart from sleep. Therefore, I will consider swing trading strategy (looking purely at D1 time frame, so that I can watch less than 5 minutes everyday and delete that apps(to remove emotions) and therefore I have more time with my studies and reading all that stuffs.
I need to form a group of (4-5people) using telegram, to backtest different pairs, if anyone interested here let me know, I will drop a telegram link and removed it once the people is enough.
So the idea is that, only buy when price is above the cloud and sell when the price is below the cloud. Stop loss is always 100 pips and target profit is based on the trend following strategy. Risk per trade is 1%. There are many “gurus” pointed out that 1)risk management and psychology is more important than your strategy.2) There are no 100% strategy. 3)I believe as long as we follow our trading strategy, proper risk management, then we will be still a profitable in the long run.
Sell the pairs when:
1)price below the cloud.
2)the dot above the price.
3)close your trade when the dot is formed in the opposite site, or it gets stopped out.
Buy the pairs when:
1)price above the cloud.
2)dot below the price.
3)Step out the trade when the dots is above the price or the price hits your stop losses.
I have used Ichimoku for years, with PSAR with MACD and RSI as trend signals. All must be in accord.
Here are my parameters:
Ichimoku: 8 22 44. to cater for a five day trading week, not 6 days which was used by Japan. The red fast line must be above the blue slow line above the cloud and vice versa below. The green line must be in accord with the trend.
PSAR 0.09 0.50 which is more sensitive to price movement, as per your explanation.
MACD 3 10 16 for entry signals and trend strength
RSI only 50 line. Above is bullish trend, below is bearish trend. There is no overbought or oversold lines needed as pairs could be in these positions for weeks.
I use these three indicators which must be aligned to enter a trade. I also use 200SMA which price must be above for buying trade and below for selling trade. In today’s trending markets it’s very profitable.
The rationale for not backtesting is that Ichimoku has stood the test of time. It works best in trending markets.
4 Likes
Hi Steve,
I just got into your above strategy, which I find a lot more efficient than most of what I could find online. And also, and also not too niche so that there are enough signals to trade with.
I am still a novice in trading (I only took it up a couple of months ago) so I am very keen to learn! I am missing a couple of settings on what you described above. For instance, I set up as follow:
Ichimoku:
- conversion line length: 8
- Base Line Length: 22
- Leading Span B length : 44
- Lagging Span: It is currently set up at 26, but I am not sure what it corresponds to?
PSAR:
- Start : 0.09
- Increment: 0.5
- Max Value: currently set at 0.2, but I am not sure what this should be?
MACD:
- Fast: 3
- Slow: 10
- Smoothing: 16
So basically, if I understand your strategy, you only trade when:
Long:
- Ichimoku : blue above red. And the cloud is below the price line
- MACD : Positive
- PSAR: signal below the price line.
- RSI above 50
- 200SMA below the price line.
Short: all of the above in reverse.
Also, I use Tradingview to trade on the NYSE stocks. What would you recommend for screener? I find Tradingview screener to be a little difficult to set up so as to screen with the above settings.
Looking forward to your feedback,
Cheers
Clement
Hi. I trade both long AND short. For LONG the red line (8) must be above the (22) blue line with cloud below, and vice versa.
The lagging span (which is of little importance) should be in sync with the latest price action movement.
For trading long, MACD histogram bars should be above the line and vice versa for selling short.
For daily trades use the 70-100 SMA as a barrier. 200 SMA is used by longer term trade positions by institutions
PSAR balls are below the candles for long trades.
I follow tradertom.com on histogram live for UK and NY opening times of major Indices for one hour. Any trades you choose to copy are at your risk, as he disclaims any involvement with any followers as it is solely his trades he shows.
Hope that helps and best of luck.
Ah now I get it, the colors of my curves were reversed for my Ichimoku.
Thank you for your time. I will follow tradertom as well. That is a good advice. I am looking at increasing my knowledge. I started trading in December 2023, and that was easy… It seems that anything I was doing yielded good results 
. So now I need to get a little more into it to have a better understanding.
And what do you use as a sell signal? The PSAR only? Or whenever any of the parameters is off compared to your entry signal?
A TREND trade signal is by following the charts and price action movement. Day chart first, followed by 4h and 1hr price movement which should all be consensus like three ducks in a row.
I use previous Support and Resistance zones to tell me where the new price action is likely to reach and use PSAR previous movements as where to stake my T/P for the new trend movement. That is critical because it is NOT guesswork like RRR, but a useful probability.
Once the T/P is in place use risk management control e.g. max 2% risk to align a S/L at least equal distance from the T/P, again using the PSAR.
Ideally, the other signals should also be in line with the trend trade movement. The only detriment is a sudden price spike, so look out for change of fundamental market consent.