Trading with Ichimoku Clouds: The Essential Guide to Ichimoku Kinko Hyo Technical Analysis 1st Edition

I think this is a great book. Full disclosure, I am not a full time trader but I dabble every day and have done so for years. I am not a Tradestation user but that is not necessary to understand the content and take advantage of what's covered in the book.The subject matter is technical and Patel does a great job of breaking it down and explaining it. The six core elements of Ichimoku are covered one a time, and then once the foundation is established, Patel puts them together and lays out usable and trade-able strategies from simple to complex. I bought the book over a year ago and within the last week found an ichimoku chart generator on freestockcharts.com.I was excited to screen stocks and ETFs to look for trades and after a few minutes I saw Facebook FB in a classic bullish pattern yesterday and opened a position with a stop based on Kijun Sen. Simple. A friend told me to be careful and I said, ichimoku is showing a strong bullish tendency and I see room to run to the upside. So far so good. Per Patel's suggestion in the book, I have moved my stops up. As an FYI: I also use the Elder Bull and Bear indicators and the Elliott Oscilators to confirm the moves but the primary driver of this trade is the awareness of the what the ichimoku indicators are saying. It's not often that so many signals converge to such a strong signal.One thing to be aware of before you buy, the ichimoku system is based on price. The stories that emerge from this can be interpreted but the only inputs are prices. For some traders that may be a difficult place to go b/c of existing biases in favor of fundamental, technical, and/or macro analysis perspectives. The more I accept price as the only piece of date that matters, the easier it is for me to manage my trades and emotions and achieve success, and most importantly, achieve success with Ichimoku. I especially love the ability to enter a trend with a clearly defined stop and let it ride until Tenkan Sen or Kijun Sen are crossed. Love it!As for the book, one drawback is the unreadable chart graphics, small and black and white, ***BUT*** Patel has posted all of the B&W graphics on his website in full color It's a quick free download and you can see the graphics in full color - cross referenced to the charts in the book.

I bought this book because I heard the author give a presentation on it: and fell in "love" wwith the idea.I have since incorporated the ideas into my scalping trading.HERB

The text is very good. The illustrations are terrible. To have to go to the website to adequately view an illlustration is inadequate. Not only that, but I was unable to open the illlustrations on the web site.

I bought this instead of Ichimoku Charts: An Introduction to Ichimoku Kinko Clouds on the strength of the reviews. I'm sad to say that the positive reviewers are mistaken -- this is a horrible book. It is easily the worst trading book I've ever read, and it is the only book I've ever felt duty-bound to return.The book contains 40 pages of information about Ichimoku that could be found on the internet, followed by a long, sub-par presentation of an example system and some assorted, useless additional material. The editing and typesetting are both very poor. Both grammatical and technical errors abound. E.g., on page 44, the heading reads "Bearish Strategy (Instrument Will Go Higher)". It should say "Lower"; you don't short an instrument you think is going up. You can read around the errors, but it makes absorbing the material much more difficult.More generally, the book is poorly organized and has no clear target audience. If you've never traded before, this is not the place to learn. If you have traded, get ready to be talked down to; the author frequently alludes to important "advanced" information he has omitted because it is "too complicated" for the reader to understand.Ultimately, this is not really a book about Ichimoku, it is an "over-my-shoulder" guide to a particular trading plan that happens to use Ichimoku indicators. Seen from that perspective, there is nothing special about this book; better examples are out there, and the internet abounds with equally good, free materials of this type. In short, no one can benefit from this book, and many people will be worse for having read it.Contrast this book with High Probability Trading Strategies: Entry to Exit Tactics for the Forex, Futures, and Stock Markets (Wiley Trading). Miner's book is primarily for new traders -- it teaches them how to do technical analysis using a few key methods, works through how to place entries, how to manage stops, and so forth. Much of that material overlaps with the material in Patel's book. Miner's book, however, uses a much more complicated set of indicators. Consequently, he spends of three times as many pages just explaining what they do and mean. Unfortunately, Patel doesn't take advantage of the space savings -- Miner's book covers all the *other* material in at least as much depth as Patel does and includes material Patel chose to leave out.The simplicity and comprehensiveness of Ichimoku should make it a good indicator family for new traders to cut their teeth on, and many experienced traders would like to learn more about it. Unfortunately, this book does not teach experienced traders how to add Ichimoku to their skill set, and it does not provide new traders with any meaningful insight. Hopefully a quality book on this topic will eventually be written. Until then, use the internet to learn this method.NB: A word of caution applicable to most trading books is in order. If you are considering this book because you believe that you'll suddenly start making money once you find the right indicator, you are making a classic amateur mistake. New, inexperienced, and unsuccessful traders should all be reading books like The Universal Principles of Successful Trading: Essential Knowledge for All Traders in All Markets (Wiley Trading) or Trade Your Way to Financial Freedom. Until you understand trading itself, there is little point in reading specialized books about some specific technique. You will never be successful as a trader as long as you don't understand basic concepts like expectancy and risk of ruin, don't know the difference between a trade setup and a trading plan, and don't use position sizing and anti-martingale money management. Professionals don't make money because they have some magical indicator; they ruthlessly control risk and patiently allow for money management and compounding to work in their favor. If any of this is not completely old hat, or if you don't understand everything I've written below, you need to rethink your approach to trading and go back to learn the basics; until you have them down pat, more advanced books are a complete waste of your money.For those still considering the book, I'll provide a chapter by chapter summary with more detailed complaints:The lengthy introduction, after rambling for a bit, eventually introduces a few trading concepts -- system trading and technical analysis. Unfortunately, the cursory coverage is just enough to get a newbie into trouble and so banal that it isn't worth repeating to anyone else. If you want to learn systems trading, I recommend Trading Systems That Work: Building and Evaluating Effective Trading Systems and especially New Trading Systems and Methods (Wiley Trading). Instead of giving you platitudes, those books will teach you how to develop, test, and improve serious systems.Similarly, if you want to understand technical analysis and what you should be thinking about when you design a system, I would consult Trading Regime Analysis: The Probability of Volatility (Wiley Trading). Gunn's book isn't perfect, but unlike this one, it teaches you what technical analysis is about.Chapter 1 is the best 40 pages in the book. It concisely goes through the various components of the system and explains what they do and how they fit together. Unfortunately, as others have pointed out, this information is freely available at countless websites. As the author himself points out there are over 100k sites that show up when you run a search. Still, for the benefit of those who have some experience trading, I'll try to provide a brief summary of the pieces so that you can decide if these indicators are worth learning about.The first two are the Tenkan Sen and Kijun Sen lines. These are similar to a moving average, but they are calculated by looking at the highest high and lowest low over some time period. Because the calculation implicitly incorporates a volatility estimate, these indicators are more powerful than ordinary moving averages. Instead of "following" price precisely, they will tend to sit at support and resistance levels. During periods of consolidation they will go completely flat. In addition to indicating bullish/bearish when prices are above/below, they have momentum and oscillator quantities. The steepness of the line indicates momentum. The distance of prices from the lines can indicate overbought/oversold, especially when the lines go flat.The next indicator is the frequently misunderstood Chikou span. This line is created by plotting the current price shifted back by 26 bars. This makes it easy to visually compare the current price to past prices. If current prices are higher, this is bullish; vice-versa for bearish. Moreover, the peaks and valleys represent old highs and lows -- places that tend to be points of support and resistance. Finally, the Chikou span acts as a trend strength indicator. When it is in "open space", the trend is strong. If the Chikou span is going to run into old price candles, expect resistance or support.Finally, there is the famous Kumo Cloud that makes the charts so identifiable. The cloud is formed by shading the area between Senkou A and Senkou B. Senkou A is the average the current Tenkan Sen and Kijun Sen shifted forward by 26 time periods. Senkou B is calculated just like the Tenken and Kijun (average of highest and and highest low), but uses the longest period of the three. It too is shifted forward 26 periods. Because the Senkou lines are approximately longer-term moving averages, the same concepts apply. When A is above B, things are bullish and vice-versa. When prices are above/below things are bullish/bearish. As with the Tenkan and Kijun, A and B tend to be support and resistance levels, the steepness of their lines indicates momentum, etc. So, if prices are headed up, but have not cleared a recent historic high of the cloud, it is likely to encounter resistance before it clears that level. How much resistance depends on the cloud thickness. In general thick clouds indicate consolidation and thin ones trends.Patel spends 40 pages carefully and clearly explaining all this. Still, I don't think you are worse off for not having read his particularly lucid presentation.Chapter 2 briefly introduces you to a very conservative daily currency trading plan. To go long, essentially everything must be bullish at once: price must be above the Kumo, TS > KS, Chikou can rise into open space, at least 50 pips to next support/resistance level, and A > B. Bearish rules are the opposite. In either case, the entry must be within 200pips of TS and 300 of KS. He uses an entry buffer of 40pips on the bullish side, but 35 on the bearish. For money management, he recommends exiting if price is more than 200 pips from TS when TS is flat. Otherwise use the KS with a buffer as your stop until you have 300 pips of profit, then swap to using the TS plus a buffer. Again the buffer is 40pips on the bullish side and only 35 on the bearish. No explanation for the 5 pip buffer difference is ever given.I've got a few doctrinal objections to his approach here. This method is about making large, but infrequent trades. It makes for a good example, but it is far from ideal. While it is generally agreed that traders should start with conservative systems on daily and weekly time frames, it is also a mathematical fact that financially a trader is always better off trading smaller positions more often. Furthermore, trades are rarely perfect, but this system sets up a "wait for perfection" mentality. In the eyes of most systems designers, Patel's system has too many rules. To factor all of those considerations in, it would be better to attribute probabilities to the factors and trade on that basis instead of having absolute rules. Finally, no one just writes out a plan and starts trading it. People do research, computerized back-testing, optimization, and walk-forward analysis. Patel's presentation puts the cart well before the horse. (The horse does not even make an appearance.)Patel doesn't explain his system at all -- he gives you the rules, but not the logic. Experienced traders will easily figure it out, but inexperiences ones are flying blind. How does he expect people to modify the system to suit their style and attitudes if they don't know why this one does what it does? A proper presentation of any system should start by explaining what it does and the logic behind how it does it. Without this knowledge, you won't be able to understand what is going on.Chapter 3 is called "Backtesting". In this chapter Patel carefully goes through 2 years of trading one currency pair. It takes up almost 40% of the book. Although I think trading walkthroughs are good, this one just isn't up to par. In contrast to the other negative reviewers, I don't think the charts are that bad. My eyesight is horrible, but I had no trouble reading them. My problem here is with the arrangement of the content. No one does back-tests manually; there is software for that. Pretending that things are otherwise is silly. Yes, you should practice paper-trading before you use real money, but that's not a backtest; it is practice.Throughout the chapter the author occasionally will say something incorrect, and then later tell you about the mistake to see if you noticed it. This wouldn't be so bad if he warned you in advance, but since he didn't, I spent a good deal of time scratching my head over the first error before turning the page to find out it was deliberate. More generally, the editing of the rest of the book is so bad that you can't really tell if things he doesn't mention are deliberate mistakes, editing errors, or if you are just plain wrong.If the author does a second edition, he needs to layout this chapter differently. Instead of having a page or so of full text followed by a two page spread of charts, he needs to space the charts out. Having the chart and relevant commentary be on the same page would save page flipping. Moreover, having the "blank" chart for the reader to figure out the entries from and then the "solution" chart on the next page would fall out naturally from this, and would allow users to check for mistakes without flat out lying to them.Chapter 4 is a perfunctory post-analysis of the trades made in chapter 3. With only 8 trades in 2 years, the data is not remotely statistically meaningful. He makes no mention of that and proceeds to "analyse" the data. (See the books above for how to do it right.) Some mention is made of optimization, but the sort of thing one expects to find here is missing. Why Patel didn't include a serious analysis of the results from multiple instruments and for a wide range of parameter values is not clear to me. Walk-forward tests with the optimized results are essential, but again, he leaves that out. Someone new to trading could really get mislead by his approach in this chapter.Patel ends chapter 4 by mentioning all the advanced Ichimoku stuff that he isn't going to touch on because it is too complicated for you -- chart patterns, Multi-time frame analysis, Entry strategies, advanced money management.In my opinion the lack of chart patterns is excusable. There are plenty of books on candle stick analysis. The other three are major oversights. In particular, position sizing and other money management concerns are the single most important part of trading. By omitting them, he's ignoring almost all of the "trick" to being successful. If you want to learn position management correctly, consult The Handbook of Portfolio Mathematics: Formulas for Optimal Allocation & Leverage.Chapter 5 is a brief look at other strategies you could use. The author admits to almost not including the chapter because he thinks using strategies other this his recommended one are destructive to traders starting out. Instead he compromised and only touches on each option briefly. I find the attitude offensive, not all readers are beginners, some are just trying to learn the system. This book does not claim to be an introduction to trading; no book about a single indicator family should be. To the extent that he is trying to teach Ichimoku, leaving out key information or giving it short shrift destroys any value the book might have had. Additionally, as mentioned above, to the extent that this book is trying to be an introduction, it fails miserably.As for the strategies he presents, all are available for free on the internet. Nothing here is original. One strategy is a single moving average system with the KS line. Two are dual moving averages with either TS&KS or A&B. Finally there is a Kumo breakout strategy. All five can be filtered with various other considerations related to the Chikou (clear space), TS&KS (TS>KS or preparing to cross), A&B (same as TS&KS), or the cloud itself (future cloud not thick, price/TS/KS above/below or within so many pips of a thin cloud, etc.) The chapter is nicely formatted and covered each of the five approaches in about the same depth as my review.Chapter 6 covers Ichimoku Time Elements and includes a brief discussion of some elements of Gann theory. I'm not sure why any author would include coverage of a technique he does not use or even understand, but Patel admits to doing so here. You can get the basic idea from this chapter, but its inclusion added little to the book.Chapter 7 is written by Doug Laughlin and discusses Trader Psychology. This has absolutely nothing to do with Ichimoku. Only a complete newbie will not have been exposed to this material, and such people can find better information elsewhere.Chapter 8 is about Day Trading. Although most currency traders interested in Ichimoku are probably planning to day trade, Patel spends only 11 pages on the topic.Patel mentions that day trading can be deadly and advises against jumping in with both feet. Unfortunately, he never explains why people who try to day trade end up messing up. As I pointed out above, the math is clear. You are always better off trading small amounts more frequently than trading large amounts infrequently. Doing this will get you the same or better growth with smaller draw-downs.Patel's attitude is fundamentally wrong. Assuming equally good execution and position managment, infrequent trading at high time frames is just not as safe as high-frequency trading at lower time frames. The reason most people start with daily or weekly data is because it is easier to manage, more forgiving of error, and not as demanding on time and mental capacity. Once you get the hang of swing trading and aren't making costly errors, you can start moving into higher frequencies. At no point does Patel explain this logic. Indeed, he omits the key part of the math that makes day trading work -- individually your positions are smaller, but you trade more frequently, compounding your returns faster and making it much more likely that your system will experience typical returns. Doing more and smaller trades also means that you are less likely to get a bad run that wipes you out. But again, the key here is "smaller"; if you take on risk you can't handle via large levered positions, you will end up in deep trouble. But this is true at any time frame. That is why experienced traders will tell you that risk management is the key to successful trading.Patel spends the first part of this chapter going through a story of a guy who messed up. He then reiterates how important it is to have a trading plan and presents a modified version of his system for day trading. All of this is worthless. If he had spent time explaining the logic of how things work, teaching system design, and going through the math behind risk management, the remonstrations would be unnecessary and the system adjustments obvious.For those who bothered to read this far, that's the sum total of the book's contents. As I said above, it is 40 pages of information about Ichimoku that could be found on the internet followed by a long, sub-par presentation of an example system and some assorted useless additional material.

I have traded full time for 27 years and used most of the common indicators. Ichimoku Clouds is very helpful in identifying where price is in a trend and identifying stops and targets. It is becoming a part of my every day trading. This is an easy book to read and an excellent introduction into trading with the help of Ichimoku Clouds.