ThunderCloud Investment in a Strong Trend

Ichimoku clouds are one of the best indicators to not only ride trends but also to avoid sideways markets.

It has five components:
1. Conversion line
2. Base line
3. Leading Span A
4. Leading Span B
5. Lagging Span (not shown on the chart above)

I would not go into details of how the calculations are made to draw these lines because the software would do it for you.
Rather I would like to share a setup that would help investors and traders to ride strong trends while ignoring weak trends and sideways markets.

Conditions:
1. There has to be a pullback in the market (Conversion line and Base line would intermesh with the Span A and Span B cloud); and
2. Conversion line should be trending above the Base line with decent gap between the two; and
3. Both these lines should be above Span A -- Span B cloud (at this time a trend would have already been established in the market); and
4. Span A should cross above Span B

At this point you can start investing in parts:
1. 50% when all the above conditions are met and
2. 50% on later pullbacks to get better average price

This method can also be used smaller timeframes like 15 minutes taking into account the larger picture on higher timeframes.

I hope you would learn something new with this educational post and make some money.
Regards

Comment:

Small Correction