1. Day trading, short term trading, options trading, and futures trading are extremely risky...

Day trading, short term trading, options trading, and futures trading are extremely risky undertakings. They generally are not appropriate for someone with limited capital, little or no trading experience, and/ or a low tolerance for risk. Never execute a trade unless you can afford to and are prepared to lose your entire investment. All trading operations involve serious risks, and you can lose your entire investment. No trades are recommendations or advice and we cannot be sued for losses of capital. All trades are for educational purposes only. Contact your broker or RIA for execution, margin, and other capital requirements. Everyone watching presentation adheres to ALL disclaimers on www.optionhacker.com and www.keeneonthemarket.com

RISK DISCLAIMER

Andrew Keene- Studied Finance at the University of Illinois before becoming a market maker on the trading floor at the CBOE.

Andrew Keene- Now trades and moderates From San

Diego,CA.- Regular guest on CNBC, Bloomberg,

Fox Business, BNN Canada. - Floor Trader @ CBOE for 10+ Years

James Ramelli

• Active Trader in Futures, FX, Stocks & Commodities and Options

• Regular Contributor to CNBC, Bloomberg, Fox Business, BNN Canada.

• Writes for Futures Magazine, Active Trader, Resource Investor, CME OpenMarkets

The Ichimoku works BEST for Forex

Take the Emotion out of Trading

"The key to trading success is emotional discipline."

- Paul Tudor Jones

• Remember even the best trading plan doesn’t work if you don’t follow it.

What is the Ichimoku Cloud?

The Ichimoku cloud is a technical analysis method that uses the past, present, and future to help traders identify at a single glance if a security is in bullish or bearish territory.

Ichimoku Kinko Hyo actually translates to “One Glance Equilibrium Chart”

The cloud is made up of 6 key components, each of which we will examine individually. When combined, these components construct the Ichimoku Cloud.

8

Components of the CloudThe Tenkan-sen Line: Short Term Trend: Similar to 10 Period MA

= (highest high + lowest low)/2 over the last 9 periods

9tenken-sen line (red line)

Components of the CloudThe Kinjun-sen Line: Longer Term Trend: Similar to 30 DMA

= (highest high + lowest low)/2 over the past 26 periods

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Kinjun-sen line (green line)

Components of the CloudSenkou Span A: Future Short Term Trend

= (tenkan-sen + kinjun-sen)/2 plotted 26 bars in the future

11Senkou Span A

Components of the CloudSenkou Span B: Future Long Term Trend: Fib 50% Retracement

= (highest high + lowest low)/2 over the past 52 bars plotted 26 bars in the future

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Senkou Span B

Components of the CloudKumo “the cloud”: How Hard or Easy it is to Break the Trend

13

Kumo

Components of the CloudChinkou Span Line: How does the Today’s Price compare to last Month

= current bar’s closing price plotted 26 bars back

14

Chinkou Span Line

Putting the Components Together

Remember, each component tells us something different.

I can use them as different levels of confirmation and as a way rule out weaker setups

I can use different time frames as levels of confirmation depending on the type of trade I am looking for.

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Why the FOREX Market is the best market to TRADE especially for

Ichimoku Cloud

What is the Forex Market and Why Do You Want to Trade It?

Forex – This is the biggest market in the world.

This means that it is the most liquid most saleable market around.

You can take bets of nearly any size in the forex market so any trader of any account size or skill level can trade.


Forex – This is the biggest market in the world.

Forex Markets are Used by:Large banks and institutions to hedge and speculateMultinational firms that collect revenue in multiple currenciesRetail traders speculating on price movement


Understanding the Forex Market:

There are both forex brokers and forex market makers that a retail trader can trade with.

Brokers charge commissions (execute your trades in broader market)

Market makers take the other side of your trades (profit off of the spread, trade commission free)


Trading With Leverage: The leverage brokers offer retail traders in forex in unmatched in any other market.

Brokers offer as much as 200:1 Leverage

Forex does not fluctuate like stock, that is why brokers allow this much leverage.

Get the BEST Possible Signals in the FOREX Markets NOW

What is a Swing Trade?

A Swing Trade can have a large time frame:

Swing trades have a holding period of one day to 6 months.

Outside of 6 months this becomes more of an “investment” or a “position.”

http://bit.ly/1wwCyxf

Time Frame for the Cloud

Increase Probability With the Cloud:

By using confirmation and the proper time frames I can confirm setups and take the highest probability swings.

http://bit.ly/1wwCyxf

Scaleable Trades

Scaling in Swing Trades:

In swing trading it is important to be able to scale in and out of trades.

• If I buy a 1 lot option I cannot scale out of the trade

• With the leverage forex brokers give me I can put on a position with any amount of risk and still be able to take multiple targets

The Correct Time Frame for Trading Forex

I cannot use too fast of a time frame:

Forex trades best on the 4 hour bar:

• The 4 hour bar is when the trend starts to get smoother

• There are less traps on the 4hr bar.

• Higher time frames can then be used for confirmation.

• Setups with confirmation have a higher probability of success.

The Correct Time Frame for Trading Forex

Forex On The Cloud:

Forex trends very well and responds well to technical levels. Many institutional trades are made based on technical levels.

Look at the trends on the 4hr bar in AUD/USD

The cloud catches several profitable downside breaks this year. The 4hr bar did not produce many traps.

AUD/USD Example

USD/CAD Example

The 5 min bar produces too much chop and way too many traps, trends don't develop well.

USD/CAD Example

• We can see the broader trends on the 4hr bar.

• My stops may be wider but I will have less traps

The BEST Signals/Pairs with BEST ROI first

Time EVER shown

The Trading Plan

Tested Setups:

• We tested setups against historical data to determine over the past 3 years what the most profitable setups are.

• We have 3 different setups we tested and found positive results with.

• Each setup uses the Ichimoku Cloud to determine entry and find confirmation

The Trading Plan

Tested Setups:

• In testing we wanted our results to be as smooth as possible so we removed EUR and CHF.

• Removing any pair tied to either of these increased our ROI and win rate.

• Stop losses and profit targets were calculated the same way every time

The Trading Plan

Aggressive Trading Plan:

• All signals are taken on breaks of the 4 hour bar

• No extra confirmation is required. Pairs for this Strategy:GBP/USDUSD/JPYAUD/USDUSD/CADGBP/JPYAUD/CADAUD/NZDCAD/JPYNZD/USD

The Trading Plan


With this more aggressive trading strategy a trader will take every break of the Ichimoku Cloud on the 4 hour bar regardless of confirmation on broader time frames.

Lets look at some examples on the following slides

GBP/USD Example

There are several large breakouts on the cloud

Notice that there are some traps on this chart, mostly to the long side…

The Trading Plan


The trades are entered on the break of the 4hr bar on the Ichimoku Cloud.

• Stop loss is above/below the cloud

• Stop loss is set on the onset of the trade

Profit targets are placed at the onset of the trade:Target #1 50% of stopTarget #2 100% of stopTarget #3 150% of stopTarget #4 200% of stop

AUD/USD Example

The short entry is at the close of the 4hr bar. Stop is above the cloud +20 ticks

The Trading Plan


The signal called for entry at the close of the bar at .77170 with a stop at .77645 (cloud + 20 ticks) As soon as I am in the trade my profit and stop loss orders are placed GTC.

Target #1 50% of stop: 0.76933Target #2 100% of stop: 0.76696Target #3 150% of stop: 0.76459Target #4 200% of stop: 0.76222

All 4 targets hit in just over 1 day!

AUD/USD Example

The short entry is at the close of the 4hr bar. Stop is above the cloud +20 ticks

All 4 of these targets were hit.

The Trading Plan

We tested this simple strategy on the 9 pairs listed earlier with great results.

Over the past 3 years: Signals: 366Target #1:59.24%Target #2 50.21%Target #3 37.61% Target #4 28.78%

Stop Losses: Cloud + 20 Ticks

ROI: 34.94%

The Trading Plan

More conservative plan

This produced a lot of signals, a trade every few days.

A more conservative trader can look for Triple Confirmation

We tested the same 4hr bar entry setups but used multiple levels of confirmation to rule out weaker setups.

Look at an example and the results…

CAD/USD Example

Breaks of the cloud are checked against wider time frames. This setup was on Mar 6th.

CAD/USD Example

We are above the cloud on the daily bar, this is confirmation.

We now check for the same confirmation on a weekly bar

CAD/USD Example

We are above the cloud on the weekly bar, this is final confirmation.

With all levels confirmed I want to take the trade.

Multiple Levels of Confirmation

Confirmation:

When swing trading we want ALL of these charts to line up, if they don’t then it is not the highest probability trade setup.

All levels line up here so I want to take the trade.

CAD/USD Example

Enter at the close of the bar 1.25631 with a stop below the cloud +20 pips at 1.25040

The Trading Plan

Conservative Trading Plan:

The signal called for entry at the close of the bar 1.25631 with a stop below the cloud +20 pips at 1.25040

As soon as I am in the trade my profit and stop loss orders are placed GTC.


It took over 2 days but all 4 targets were hit!

CAD/USD Example

All Targets hit and never comes close to a stop.

The Trading Plan

Triple Confirmation gives us a smaller ROI but more consistent results

Over the past 3 years: Signals: 34Target #1: 73.53%%Target #2 64.71% Target #3 50.00% Target #4 38.24%


ROI: 16.00%

Swing Trading Forex Trades

The Trading Plan

The Long term Trading Plan:

• We also tested signals off of the daily bar with confirmation.

• These signals are longer tem trades than those based off of the 4hr bar.

• Daily bar signals entry and the weekly and monthly provide the confirmation.

This is for the most conservative trader as the holding period will be the longest for these trades.

GBP/USD Example

GBP/USD Example

Break to the downside on the daily, need confirmation on weekly and monthly

GBP/USD Example

We are well below the cloud on the weekly bar. Confirmation

GBP/USD Example

We are well below the cloud on the monthly bar as well this is the final level of confirmation.

I want to take the trade off of the daily bar signal

GBP/USD Example

GBP/USD Example

Short the close of this bar at 1.50204 with a stop at 1.53905 (cloud + 20 ticks)

The Trading Plan

Longer Term Trading Plan:

The signal called for a short of the close of this bar at 1.50204 with a stop at 1.53905 (cloud + 20 ticks)

As soon as I am in the trade my profit and stop loss orders are placed GTC.


So far 2 targets have been hit, remember this isa longer term strategy.

GBP/USD Example

2 Targets already hit, remember this is the longer term strategy.

A trader can have on a small amount of risk for weeks or months

The Trading Plan

While this is a longer term plan it produces VERY consistent results

Over the past 3 years: Signals: 15Target #1:93.33%Target #2 86.67%Target #3 53.33% Target #4 26.67%


ROI: 15.26%

The Trading Plan

Only 15 Signals?

The longer term plan produces the fewest number of signals but the most consistent results.

For a more conservative, less active trader this is a strategy that is much easier to manage and still very profitable.

Summary of Topics

• Forex is the biggest most liquid market in the world.• Traders of any skill level can trade forex with any account size. • The Ichimoku cloud works best in trending markets making it very

powerful for forex.• Forex markets tend to respond well to technical levels used by

many traders. • The best signals in forex come off of the 4hr bar. • This is the most profitable time frame for forex but for more

conservative or beginner traders confirmation can be used.• Confirmed setups have a higher probability of success, it helps a

trader focus on the best setups. • Stops and profit targets are always set the same way• Orders are GTC orders, no moving targets, this removes emotion

from the equation. • Forex trades can be carried for a very long time with a small

amount of capital.

1. Day trading, short term trading, options trading, and futures trading are extremely risky...

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