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!
