SWING TRADING With ICHIMOKU CLOUD (Trading Strategy & STOCK SELECTION) 🔥🔥

SWING TRADING With ICHIMOKU CLOUD (Trading Strategy & STOCK SELECTION) 🔥🔥


– [Trading Educator] So in
this swing trading video, we are going to look
into Ichimoku Cloud, and how you can use the
basic Kumo Breakout set-up for taking swing
trades in the market. So, in this video
I’m going to show you how to use a multiple
time frame strategy, and we will be discussing
about entry-exit stop loss, and I’ll also be covering
stock selection in great depth. So, let me first
show you how to apply Ichimoku indicator on the chart. So, at tradingview.com go
to the indicator section, and here look for
Ichimoku indicator. Now, this is a default
indicator that is built in. So, you’ll just click on it. Close this tab, and indicator now will
be applied to the chart. So, once you have this
basic chart set-up ready, you then have to ensure
that your time frame is set to 15 minutes, and you can change the
symbol from this section. So, the basic rule
for Kumo Breakout has already been
covered in two videos. In case you have
missed those videos, link to those will
come up at top right, end of your screen. So, once you have this
basic chart ready, I also like to include
the volume indicator. So, just click on the
indicator section here, scroll down, and you’ll find
the standard volume indicator. So, click here and volumes
will come up on the chart. Now, since this
is swing trading, and you have limited
time in your hand, you’re looking for
precisely timing the trade here to perfection, so that price moves
in the direction of your anticipated trend. So, there are instances where, if you look at
this instance here, even these points where
price is trying to move above the Kumo Cloud, but
it somehow fails to do so. So, I’ll be showing
you how to counter this using a multiple
time frame strategy, and we’ll be explaining
the rules clearly. So, the basic set-up
of Kumo Breakout states that as price starts to move
about the Kumo Cloud here, you take entry in the trade, and set the Senkou B
level as the stop loss. So, the basic rules, as
such, work really well. It is just that you have to
work on two key elements here. Number one, identifying
the trend, currently. For that we will be using
multiple time frame charts. And number two, with the help
of volume and price analysis, you have to determine
whether the current breakout that is happening on the chart is the one that has
high odds of success. Now, these two points
we will emphasize upon, as we move forward in the video. So, before we move forward, we will require one more
indicator on the chart, and that is of comparative
relative strength indicator. For including the
indicator on this chart, go to the Pine Editor
and paste the code that I have left in
the comment section. So, I am pasting the code
for relative strength here, and then add to chart. Now, minimize this here, and relative strength line
would be visibile here. So, through relative
strength line, you’re only going
to see which stocks are underperforming the market and outperforming the market. Now, there are a couple
of fundamental data points that you have to check as well, and this is for stock
selection section, and when we move
to that section, I will be exactly showing you which data points
you have to consider. So, when you’re trying to
enter based on this method, you’re looking for
price to decisively move above the Kumo Cloud and for
volume expansion to set in. Now, apart from this, I also like to
look at what Tenkan and what Kijun do once price starts moving above
the Kumo Cloud. So, in this instance, as price started moving
above the Kumo Cloud, both Tenkan and Kijun
started trending higher. Now, this is something you
have to ensure it happens. Only then, you have to
initiate long position. Do take a note at volume
expansion here, as well. This is also a
must when it comes to taking entry
based on this set-up. Now, if you open up a 15
minute time frame chart, and you select any symbol, you will find lot of whipsaws
based on what I’m showing here. Now, this is where the higher
time frame comes into picture, and let me now show
you how to use that. So, let me now
explain the importance of higher time frame
in this strategy. So, the symbol
here is ICICI Bank, and the time frame that you
can see is daily time frame. So, what I like to
check as a stock filter is that Tenkan and Kijun
on daily time frame should be trending higher, and relative
strength line should also be sloping on the upside. So, if you look at
something like 22nd October, let us assume we
don’t have this data, let me just scroll
out the chart. So, as of 22nd October, Tenkan has already
started moving higher. Now, Kijun based on
how it is constructed, will only start trending
couple of days later, so here you can
clearly see that Kijun has also started moving higher. Right? So, what you need to check
for is both Tenkan and Kijun have clearly started moving up. If you also look at the
daily time frame chart, ask price has moved
above the Kumo Cloud. Clear volume expansion
is also visible, and at this point, 22nd
October, if you see, look at how relative
strength line is structured. Clearly, it has moved
up even if you check for a period of
couple of months, relative strength line is
clearly trending higher. So, what this tells
you is that ICICI Bank is outperforming
the broader market, and these are the stocks
that you have to focus upon when you’re trying to
swing trade in the market. So, there will be
these instances where price is
above the Kumo Cloud and Tenkan has
started moving up, but Kijun remains
relatively flat. If this is the case, you
can still select the stock. Do take a look at
Chikou as well. If Chikou is also
trending higher, than this certainly qualifies
as a valid swing trade. So, a combination of
rising Tenkan price being above the Kumo Cloud and relative strength
line moving higher is one of the basic conditions that has to be met
when you’re trying to swing trade based on
this Ichimoku Cloud method. So, based on what we saw
in the previous slide, let us now see,
after 22nd October, how entry could have been taken
based on what we discussed. So, let me now
switch back the chart to 15 minute time frame chart, and let us now move
back to 22nd October. So, this is 22nd October, and this is where on a
daily time frame chart the overall structure
of ICICI Bank as for Ichimoku Cloud is positive. So, couple of sessions later, price is trading sideways, and we don’t get
a valid entry yet, but do take a note that
Kumo Cloud is positive, and price is trying
to head higher and take support
within this Kumo Cloud. So, as we move forward
on 25th October, we get this wide range
candle on the chart with volume expansion clearly
visible in this region. If you take a look
at from where price has started rising higher, it is exactly at the
Kumo Cloud level. Do take a note at
Chikou as well. It is also trying
to move higher, and price is above near
the resistance level. So, based on whatever
we’ve discussed, this certainly qualifies as a long entry trade
in the market. Now, once you’ve taken
entry based on this method, at around 460, 462, your
stop loss is set at 450, which is the Senkou B level. So, couple of sessions later, price does start to move higher, and the Senkou B is violated
at this level around 470. So, as a swing trader,
many of you would question that when we are
entering around 462, we just get to make about
10 points that is 2% gain. So, this is where your
own risk to reward preference would
come into picture, and let me just explain this. So, when you’re
taking entry at 462, your stop loss is set at 450. So, stop loss is
roughly of 12 rupees. So, when price starts
moving from 462, it makes high of 480. So, from 462 to 480 you
are making about 18 rupees. Now, many swing traders
start to exit trades once they get 1.5 times
of what they are risking. That is in terms of R Multiple. Now, I have discussed this
concept in great depth, and R Multiple
video is something you should watch for sure. I will leave a link for it
in the description box below. So, what I like to
do in swing trade, and again this depends
on the larger cycle that is playing out, I always use these
strong candles to offload some of my positions, as price is moving in
the direction of trend. This is mainly because at 480, I don’t think
anyone can tell you that 472 is going to come
up in the next few hours, which his why, when
you start using these wide range candles
to start exiting five, ten, 15% of your positions, you’re actually
booking out profits as price is moving higher. So, this is staged exit, and this is something you
should definitely look at if you are a swing
trader in the market. So, essentially,
when you are trying to swing trade this strategy, you only have to
look at two things. Number one, on a daily
time frame chart, trend has to be clearly on
the upside or on the downside that is if you’re
looking to short sell, and number two, when you move
down to 15 minute time frame, you need to wait for a
fresh trigger in the market where candle is pretty strong and is backed by
volume expansion. So, these are the
only two criteria that you have to sort of
check before you’re trying to take long position
in the trade, and stop loss naturally has
to be set at Senkou B level. That is when you’re
initiating the trade. Now, there is one more
way you can exit early, and that is to use Kijun
as your trailing stop loss. Now, in this trade had
you entered at this point, that is somewhere
between 460-462, you would have got
exit based on price moving below the
Kijun level at 475. Now, had you used Senkou
B to trail your position, then your exit would be
somewhere around 470, 471. So, this is another 1% here if you prefer exiting
based on Kijun. So, let me now show you
what is the importance of again referring to
a higher time frame. So, based on our
higher time frame, we saw the trend for
ICICI Bank was clearly up, and therefore we got an entry, and we took an exit
based on your preference that is whether
you prefer to exit at Kijun or at Senkou B. So, let us see what happened
couple of days later. So, price started moving here, and in this region you
again get a fresh breakout, while price is trying to
attempt to move higher on back of volume expansion. Mind you, during
this entire duration, trend on daily time
frame is still up. So, the important question is, do you enter at this
level, that is at 470? So, when I’m trading, I would
not prefer to enter here because in my opinion this
is not a strong structure. Kumo Cloud is
still moving lower. There are odds that price
would again reverse. Yes, volume expansion
has happened, but if you look at this candle, volume expansion is visible, but on the fourth candle here, again volumes are
on the lower side. So, I would not prefer to enter, and I would wait out
to see what happens over the next two,
three candles. So, couple of candles later, price does start to
retrace back again. So, when I see this happening, it is again retracing back
within the Kumo Cloud, and do note here that based
on what we discussed in part, one of Ichimoku Cloud Series, Kumo Cloud always acts
as a strong support or resistance in the market. So, when I see this happening, I would draw out a resistance
line at around 472, and I would then want price to
cross that resistance region, and then I would prefer taking
a long trade in the market. So, let us look at what
happens in subsequent sessions. So, in this part, price
is trying to move higher, but this candle is
not entirely positive, and I will reframe from
taking a trade here. Again, the volume
expansion is not visible, rather price has opened at 474, and it has closed at 470. So, again a few sessions later, price starts
consolidating sideways, and it starts to move lower. Now, while this was happening, look at what happens
couple of hours later. You then get this
wide range candle, which takes out the
previous pivot level that is marked on the chart, and look at the
volume expansion here. Volumes have clearly expanded in the direction of price move, and do take a note here that
this is 15 minute time frame, and trend on higher time frame that is daily time
frame is still up. So, this does qualify
as a long entry here because Senkou A has also
moved above Senkou B. So, the Kumo Cloud
has turned green here. This was the Kumo twist level. Again, this was a
concept that we discussed in part three in case you
have missed those videos. Do watch it. So, for me, this is
valid trade at 473, and initially I would
set a stop loss at 466. So, that’s a difference
of seven rupees, and I would attempt to
go long in the market. So, post entry, now take
a look at what happens. Price has one more
breakout candle. Again, volume
expansion is visible, and then price starts
to move higher. So, in-between price,
again retraces back and takes support
at the Kumo Cloud. So, this is one more
case of price taking support at Kumo Cloud, and then it again starts
moving higher with momentum. So, this is a common template that plays out again and again, where-in you have to refer to the daily time frame
chart for trend, and then move down to a
lower time frame chart to see whether there
is a fresh entry available in the
direction of trend. So, this was a
pretty decent trade, and as of now, market is open, and ICICI Bank is
trading at 490. So, based on the
swing set-up here, entry was at 472, and the Senkou B
got violated at 486. You don’t necessarily have to be in the trade to the point
Senkou B is violated. It is all about
risk-reward here. So, once you’re entering at 472, your stop loss is, at
this point, that is 465. You can even take a stop
loss at Senkou B level. That would be at 468. So, 468, 472 minus 468
would be four rupees. So, initial risk is four rupees. Now, assuming you
are at this point, that is at 482, so you’re
making about 10 rupees with a risk of four rupees. So, in case you are
getting the trade further, and you are somewhere
at this point at 486, you are making
14 rupees profit by risking just four rupees. So, it all depends on how you
are assessing risk-reward, and you can time
exits based on that. So, too many traders
try to anticipate where the price will move. What I would suggest
is instead of focusing on where the price might head, you can use your
own risk-reward data to analyze where you
typically exit your trades that is at two times
risk, three times risk, or even four times
risk or higher. As far as I’m concerned,
once I’m inside the trade, and the trade moves
about 1% higher, I then use all
these strong candles to actually offload
some of my positions, so that I am exiting as
price is moving higher, and then I look at
my R Multiple data, that is how much I’m risking, and how much
currently I’m making, and based on this data, I make a better
informed decision. So, now that we have
understood the basic set-up, let me now move to the
stock selection aspect. Now, stock selection quite
often is as important as the strategy itself, and therefore I
wanted to show you a couple of basic criterias
that you should follow in order to select which
stocks you have to trade based on this
Ichimoku Cloud set-up. Now, in case you are trading
US markets or UK markets or any other market
apart from our market, you can use such screeners
in your own market segments to identify these basic,
fundamental data points. So, the first step
you have to do is just go to screener.in. I think you will have
to open up an account. It’s completely free. The first criteria
that I would put up is market capitalization. So, let’s say I’m taking
a market capitalization of greater than, let’s
say, 1,000 crores. So, once you run this query, look at the number
of stocks you get. So, this is 673 stocks. Now, this is where the
actual problem comes in because it is not practical
to follow so many stocks, and therefore now we
need a better method to filter down to
about 10 to 20 stocks that we have to keep in our
watch list at all the time. So, the first modification
that I’ll make is to this market
capitalization query. I will now set this
at 10,000 crores. So, the basic criteria that
a company should satisfy is that it should have
a market capitalization greater than 10,000 crores. So, once you run this query, you then get about 217 names. So, 217 is still better than the 600, 700 odd names
that we just saw. So, now what I’ll do is
I’ll add one more filter, that is debt to equity should be less than 0.5. Once you again run this query, you will then get 124 names. Again, it’s almost half
of what we just had. I would then set up
two more criterias based on profitability and
return on equity ratio. So, profit growth I would want greater than 10%
which is very nominal, and return on
equity I would want somewhere closer to 25%. So, this is what
defines good companies that is consistent companies, and such are the companies
we should be focusing upon. So, there you go. From 600 odd stocks, we are
now down to only 19 stocks. So, if you look in
all these stocks, these are all
relatively good stocks, and are sort of low
volatility stocks, which kind of make
a good combination when it comes to swing trading. So, in this case,
just by applying few phenomenal data
points as criteria, you have reduced the number
of stocks that you track from about 600, 700 to
just about 20 names. Now, other than these stocks that have shown
up on the screen, I would definitely
include the entire banking sector space,
that is the main stocks, in the banking sector. Now, take for example SBI,
HDFC Bank, ICICI, even Axis. You can even include
Kotak Mahindra Bank. Its a wonderful bank. So, all these stocks
I will again add on top of these
stocks that I’ve got. Now, I’m doing
this mainly because I have a set of low
beta stocks here, and I also want to
track high beta stocks. So, for high beta stocks, I would take market
leaders of banking sector, financial sector, energy sector, so Reliance would qualify for
it, and infrastructure sector. So, that would be stocks
like Larsen & Toubro. In automobile sector, I would look for
Tata Motors, Maruti, and in the steel sector, I would look at Tata
Steel and Hindalco. So, once you do this, you would have
about 30 odd names that you need to track
on a daily basis, and you can just use a
website of tradingview.com to just go through
a list of stocks, which are on daily time
frame in an uptrend, and then you can go down to
15 minute time frame charts to see which stocks are
qualifying for a long trade. So, while trading this
Ichimoku Cloud strategy, you have to make sure you follow the essential steps
that are required to identify high
probability trade. So, the first step would be
the stock selection steps that we just saw in
the previous slide. Once you are down
to about 30 stocks, the second step would
be to then go to daily time frame chart and
check for wide range candles, volumes, and relative
strength line. It should be clearly sloping up, and once you identify the trend, you then need to come down
to 15 minute time frame chart to identify such candles
which are clearly moving above the Kumo Cloud
with volume expansion. So, these are the
essential three steps you have to undertake when you want to trade
this strategy successfully. Other than these three steps, I would strongly
recommend for you to not add any more filters
because within itself Ichimoku is a complete
trading strategy, and once you combine
all these simple filters that I have shown you, you will get a very good
method for swing trading. So, do check out the remaining swing trading
videos I have done. I have done about 15 videos, where I have explained various
aspects of swing trading. Link to all those
videos will come up towards top right,
end of your screen.

29 Comments

  • Trade With Trend

    November 16, 2019

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  • Commander Raju

    November 16, 2019

    Let's fine tune our clouds and get into the space of subject…Learning time… weekend time

    Reply
  • yogi5456

    November 16, 2019

    Can't wait for 1Dec for your paid course 😍

    Reply
  • Jayesh Khatri

    November 16, 2019

    You have not said anything about future kumo. We don't have to check future kumo?

    Reply
  • schubertpeter79

    November 16, 2019

    another great video! just 1 question. am based in europe, and have no idea about rupees. when u talk about market cap, is that small, mid or large? just to make it easy for your international followers. thanx in advance!

    Reply
  • Sunando Ghosal

    November 16, 2019

    Please type the RS Pine Formula here

    Reply
  • shiva chitti

    November 16, 2019

    is the pine editor code refers to RSI or it is different ?

    Reply
  • joethim

    November 16, 2019

    Very informative. Thanks for sharing, especially the screening part

    Reply
  • Mohit Singh Puri

    November 16, 2019

    Hello sir, hope you are doing well.
    It is good to know how IC works.

    As a viewer I would suggest to continue with IC and macd remaining parts as they are pending only if possible.

    Thank you.

    Reply
  • Raj Soneji

    November 16, 2019

    Value addition on every video !!

    Reply
  • Rama Moorthy D

    November 16, 2019

    Please post video related to RENKO Charts… It would be very helpful.
    Your way of explanation will ensure we understanding this HNI set-up completely.
    Thanks.

    Reply
  • kkmb

    November 16, 2019

    Thanks a lot for your effort and time. A perfect blend of fundamental and technical analysis. A small suggestion, at the end of the video if you can add some quiz or high level analysing questions which will stimulate some viewers to do some home works, clarifying doubts, gauge their levels and more interactive. You can reveal the answers in your next week videos.
    Already you are doing a lot to our community. Thanks a lot and have a nice time.

    Reply
  • pravin bardolia

    November 16, 2019

    sirji another good work as always you did now i want currany tradig by you

    Reply
  • Sameer Prabhu

    November 16, 2019

    Thanks for another insightful vdo on IM. A couple of queries….
    1) In the earlier vdos on IM, for swing you mentioned that all (tenken, kijun, senkou a & b) should be trending up (assuming long position). But over here you mentioned only tenken & kijun should be up. Please clarify
    2) For RS, sometimes the avg length used is 10 and sometimes 200. So which one do we go for? Does the average line has any significance?

    Reply
  • Kiran Kumar

    November 16, 2019

    Simple and effective as always 👌 can we use same for intraday too

    Reply
  • Abhishek Sharma

    November 16, 2019

    Thank you Sir 💓🌺

    Reply
  • ravi lathiya

    November 16, 2019

    Thanx DA, Waiting for one swing strategy form a long time n about to say you for any strategy n u posted it… will definitely work on this n revert back to u .. Tnx once again

    Reply
  • Yogesh Sharma

    November 16, 2019

    You r one of the few people who thinks about retail traders. Thanks once again for your time and efforts. 🙏

    Reply
  • Sundar Kambam

    November 16, 2019

    Wow. I loved the Ichimoku series. Many of my doubts about when to take an intra day and swing trades are now fully clear. I mostly trade in options and now i will fine tune my option swing entries based on the Daily and 15 minutes time frames. Thanks a lot for an amazing series.

    Reply
  • yogeshram rao

    November 16, 2019

    super guruji, every video have value added concept, u sharing u r knowledge and not expecting any thing from us, and am not compare to any one your the one super one……………. that's it.

    Reply
  • Shan NKHT

    November 16, 2019

    RESPECTED BROTHER,,,,when in morning ,,I got the notification,,,then I was on the way of my office….after leaving the office….I was just thinking to reach home quickly to watch your videos…

    Thanks for this EXCELLENT video…

    God bless you with lots of love….🙏

    Reply
  • sumit tanwar

    November 16, 2019

    This video is a gem 💎
    Sir please provide me code for RS indicator thanks

    Reply
  • Mani Sharma

    November 16, 2019

    Sir, as chikou line is always at current closing price marked at 26 days back and it can not be above or below current closing price ,then how it can be considered while taking decision?

    Reply
  • ravi lathiya

    November 16, 2019

    Missed the seminar this time DA, when I notice msg already sold out, Bad-luck.

    Will definitely try next time for Mumbai

    Reply
  • A Prakash

    November 16, 2019

    awsm sharing.! does it also work on intraday Index (nifty / bank nifty)trades …?

    Reply
  • A Prakash

    November 16, 2019

    one more Q – what strategy has better success ratio, VWAP+ MVWAP OR ICHIMOKU CLOUD..? personally i find Vwap enough accuarte, but did not tried Ichimoku yet..? please share ur thoughts.!

    Reply
  • Surya Narayan

    November 17, 2019

    well explained bro..from monday i will start to practice.Thank u from my Heart.

    Reply
  • ravi lathiya

    November 17, 2019

    Reliance on daily trending up…. entry after 1485 right DA.? https://imgur.com/j2byw80

    Reply
  • FromTheSky

    November 17, 2019

    Hi where can I get the code you pasted in tradingview?

    Reply

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