InariN CloudS (INCS) is my custom model of InariN.
I usually use INCS in 300 ticks (other software) and 5 minutes charts for day trading.
Please read script "InariN simple" for basic usage.
I share background and fundamental ideas of day trading and INCS here.
I start with the practical conclusion and then explain INCS.
Maybe you'll notice that most indicators are unnecessary at the end of this text.
Anyway I compile fundamental ideas that I wanted to know as a beginner.
(I'll update to finish this text, please wait for some time.)
///Premise of trading///
Market's purpose...facilitating trading
Trader's purpose...making money
Market is stronger than trader and trader need adjust to market.
However trader have controllable side.
Market's control...Trend, Volatility
Trader's control...Money management, Making Risk:Reward, Choosing and exercising trading strategy
///Simple rule (Conclusion)///
I made simple rule "Just Do It Now" to check essential ideas on every trade.
Traders can use thousands of indicators but only use three choices "Buy, Sell and No trade".
If you have bad result, you had better suspect not your indicators but your three choices at first.
(This is one of the best advice I have ever heard by N jijii.)
I usually use INCS in 300 ticks (other software) and 5 minutes charts for day trading.
Please read script "InariN simple" for basic usage.
I share background and fundamental ideas of day trading and INCS here.
I start with the practical conclusion and then explain INCS.
Maybe you'll notice that most indicators are unnecessary at the end of this text.
Anyway I compile fundamental ideas that I wanted to know as a beginner.
(I'll update to finish this text, please wait for some time.)
///Premise of trading///
Market's purpose...facilitating trading
Trader's purpose...making money
Market is stronger than trader and trader need adjust to market.
However trader have controllable side.
Market's control...Trend, Volatility
Trader's control...Money management, Making Risk:Reward, Choosing and exercising trading strategy
///Simple rule (Conclusion)///
I made simple rule "Just Do It Now" to check essential ideas on every trade.
Traders can use thousands of indicators but only use three choices "Buy, Sell and No trade".
If you have bad result, you had better suspect not your indicators but your three choices at first.
(This is one of the best advice I have ever heard by N jijii.)
Phát hành các Ghi chú:
///Trader's equation///
Traders need positive expected value to make money.
Basically there are three types of strategies in day trading.
Trend pullback entry 50-70%WP Risk:Reward is 1:2
Trading range fade entry 50-60%WP 1:1
Trend reversal entry 40-60%WP 1:2
Therefore trend pullback entry is best trade(discretionary trader use EMA pullback entry).
Short time limit reward and considering the fees in day trading, traders need more than 50%WP
and RiskRewardRatio(reward/risk) is larger than 1.
To increase WP needs strong trend and to increase RIskRewardRatio needs high volatility.
Support and resistance lines are useful too.
1.Multi time flame analyze increase the accuracy of expecting trend direction.
2.Support and resistance lines are barriers and we can find those at charts.
3.Volatility has time cycle and we can find squeeze to expect high volatility at charts.
In my personal opinion, the easiest is 2, followed in order by 3 and 1.
If you can expect high volatility approximately and make proper RiskRewardRatio,
you can make money without expecting trend direction in the long term.
Traders need positive expected value to make money.
Basically there are three types of strategies in day trading.
Trend pullback entry 50-70%WP Risk:Reward is 1:2
Trading range fade entry 50-60%WP 1:1
Trend reversal entry 40-60%WP 1:2
Therefore trend pullback entry is best trade(discretionary trader use EMA pullback entry).
Short time limit reward and considering the fees in day trading, traders need more than 50%WP
and RiskRewardRatio(reward/risk) is larger than 1.
To increase WP needs strong trend and to increase RIskRewardRatio needs high volatility.
Support and resistance lines are useful too.
1.Multi time flame analyze increase the accuracy of expecting trend direction.
2.Support and resistance lines are barriers and we can find those at charts.
3.Volatility has time cycle and we can find squeeze to expect high volatility at charts.
In my personal opinion, the easiest is 2, followed in order by 3 and 1.
If you can expect high volatility approximately and make proper RiskRewardRatio,
you can make money without expecting trend direction in the long term.
Phát hành các Ghi chú:
///To expect trend, volatility and barriers///
Traders have to think trend direction easily.
If you are swing trader, you give priority to buying when current price is higher than previous day close
(number1 and 2 are buying area in explanation drawing).
You can judge Buying(up trend), selling(down trend) and no trade(trading range)
from relationship between current price and previous day open, high, low and close.
You can use moving average, trend line and half line similarly and the slope of lines add a nuance.
For example, current price > up trend line > 50EMA > previous day close is strong up trend.
You can make your own rule book of trend direction(clear criteria).
Even you can't check candlestick (bullish or bearish), you can decide something.
It's because that traders can always think RiskRewardRatio and entry, target and loss-cut are a set.
For example, when previous candlestick is "?", you do sell entry at number3 and put target at number5 and loss-cut at number1.
///Ichimoku ideas (this text is basic knowledge and my interpretation, but even in Japan it's hardly understood.)///
Ichimoku Sanjin made Ichimoku cloud and was proud of his proper handling every time (not always win).
Traders can't predict market behavior but can always handle (trader's control).
Proper handling is limiting losses, making positive RiskRewardRatio and acting on clear criteria.
Trading based on clear criteria enable traders to reflect and improve trading.
Ichimoku cloud is a tool to assist his ideas (Ichimoku cloud that lacks his ideas is just strange moving average lines).
His ideas is composed of Time theory, Wave theory and Price level theory. He valued Time theory.
However modern practical interpretation is 1.Wave theory 2.Price level theory 3.Time theory.
(If you hear his ideas for the first time, it may sound strange like me, but I assured that this is the wisdom of man.)
1.Wave theory...price movements have to consist of three waves (N wave).
2.Price level theory...define the price axis of N wave.
3.Time theory...define the time axis of N wave.
In short, second wave(B to C) becomes an axis of symmetry.
Why traders define unrealistic price movements?
It's because making a ruler(clear criteria) to measure real price movements.
Traders can evaluate real price movements by the difference between ideal price movements and real price movements.
In addition, by classifying into typical patterns, failure patterns can be assumed in advance and it becomes easier to handle them.
In fact, day traders need larger reward than risk and it requires symmetry of the price axis
(When I realized this fact, I thought I had touched the truth of market).
(Ichimoku ideas are similar to Wilder's adam theory and Larry Williams's market structure, but it is more flexible and easy to use.)
Traders have to think trend direction easily.
If you are swing trader, you give priority to buying when current price is higher than previous day close
(number1 and 2 are buying area in explanation drawing).
You can judge Buying(up trend), selling(down trend) and no trade(trading range)
from relationship between current price and previous day open, high, low and close.
You can use moving average, trend line and half line similarly and the slope of lines add a nuance.
For example, current price > up trend line > 50EMA > previous day close is strong up trend.
You can make your own rule book of trend direction(clear criteria).
Even you can't check candlestick (bullish or bearish), you can decide something.
It's because that traders can always think RiskRewardRatio and entry, target and loss-cut are a set.
For example, when previous candlestick is "?", you do sell entry at number3 and put target at number5 and loss-cut at number1.
///Ichimoku ideas (this text is basic knowledge and my interpretation, but even in Japan it's hardly understood.)///
Ichimoku Sanjin made Ichimoku cloud and was proud of his proper handling every time (not always win).
Traders can't predict market behavior but can always handle (trader's control).
Proper handling is limiting losses, making positive RiskRewardRatio and acting on clear criteria.
Trading based on clear criteria enable traders to reflect and improve trading.
Ichimoku cloud is a tool to assist his ideas (Ichimoku cloud that lacks his ideas is just strange moving average lines).
His ideas is composed of Time theory, Wave theory and Price level theory. He valued Time theory.
However modern practical interpretation is 1.Wave theory 2.Price level theory 3.Time theory.
(If you hear his ideas for the first time, it may sound strange like me, but I assured that this is the wisdom of man.)
1.Wave theory...price movements have to consist of three waves (N wave).
2.Price level theory...define the price axis of N wave.
3.Time theory...define the time axis of N wave.
In short, second wave(B to C) becomes an axis of symmetry.
Why traders define unrealistic price movements?
It's because making a ruler(clear criteria) to measure real price movements.
Traders can evaluate real price movements by the difference between ideal price movements and real price movements.
In addition, by classifying into typical patterns, failure patterns can be assumed in advance and it becomes easier to handle them.
In fact, day traders need larger reward than risk and it requires symmetry of the price axis
(When I realized this fact, I thought I had touched the truth of market).
(Ichimoku ideas are similar to Wilder's adam theory and Larry Williams's market structure, but it is more flexible and easy to use.)
Phát hành các Ghi chú:
///INCS and Gannbox///
I upgraded InariN to judge intuitively more.
Setting parameters are for day trading (especially 5 minutes chart).
Fast period(8)... 8SMA, to make momentum zone and small cloud.
Short period(25)... 25EMA and to make small cloud.
Middle period(50)... 50 period half value line and to make small cloud.
Long period(200)... 200 period high-low bands and to make large cloud.
Long EMA(240)... 240EMA and to make large cloud.
Short period keltner(2.25)... multiplier of keltner channels (short period).
Time retracement M1(50)... 50 sifted close.
Time retracement L1(200)... 200 sifted close.
Momentum line... 8SMA is to make momentum zone.
Fast line... half value line of 8 period and 25 period half value line (about 16.5 period) is 1/3 pullback line. (no offset Ichimoku cloud)
Short EMA... 25EMA is pullback line used by Bob Volman ( between 1/3 and 1/2 pullback line).
Middle middle... 50 period half value line is 1/2 pullback line and used to decide middle term trend direction.
Long EMA ... 240EMA is used to decide long term trend direction. (Al Brooks said 20EMA at 1 hour chart is important and 240EMA at 5 minutes chart is about the same line)
L higher high, L high, L high middle, L middle, L lower middle, L low and L lower low... 200 period high-low bands and each line is evenly spaced. (L high and L low are important to check breakout)
M1/2 and M1... 25 period and 50 period sifted close are used to measure time retracement and momentum of middle period. (Ichimoku lagging span)
L1/2 and L1... 100 period and 200 period sifted close are used to measure time retracement and momentum of long term period. (Ichimoku lagging span)
Keltner Upper and Lower... I use it to assist fade entry (I use EMA to calculate ATR and 2.25 parameter is Adam Grimes setting).
Momentum... I use to check momentum (strictly speaking, momentum is slope of SMA but I regard the area as momentum).
Small cloud... I use to decide middle term trend and use it as pullback zone.
Large cloud... I use to decide long term trend and sometimes use it as pullback area.
In addition, I use Gann box that customized symmetry.
I prefer Gann box to Ichimoku lagging span.
I painted charts to explain Ichimoku ideas and INCS.
Traders always evaluate the power relationship between bull side and bear side and it needs practice.
INCS, symmetrical Gann box and to measure RiskRewardRatio assist traders with good practice and developing trader's intuition.
Thank you for reading this to the end!!
I upgraded InariN to judge intuitively more.
Setting parameters are for day trading (especially 5 minutes chart).
Fast period(8)... 8SMA, to make momentum zone and small cloud.
Short period(25)... 25EMA and to make small cloud.
Middle period(50)... 50 period half value line and to make small cloud.
Long period(200)... 200 period high-low bands and to make large cloud.
Long EMA(240)... 240EMA and to make large cloud.
Short period keltner(2.25)... multiplier of keltner channels (short period).
Time retracement M1(50)... 50 sifted close.
Time retracement L1(200)... 200 sifted close.
Momentum line... 8SMA is to make momentum zone.
Fast line... half value line of 8 period and 25 period half value line (about 16.5 period) is 1/3 pullback line. (no offset Ichimoku cloud)
Short EMA... 25EMA is pullback line used by Bob Volman ( between 1/3 and 1/2 pullback line).
Middle middle... 50 period half value line is 1/2 pullback line and used to decide middle term trend direction.
Long EMA ... 240EMA is used to decide long term trend direction. (Al Brooks said 20EMA at 1 hour chart is important and 240EMA at 5 minutes chart is about the same line)
L higher high, L high, L high middle, L middle, L lower middle, L low and L lower low... 200 period high-low bands and each line is evenly spaced. (L high and L low are important to check breakout)
M1/2 and M1... 25 period and 50 period sifted close are used to measure time retracement and momentum of middle period. (Ichimoku lagging span)
L1/2 and L1... 100 period and 200 period sifted close are used to measure time retracement and momentum of long term period. (Ichimoku lagging span)
Keltner Upper and Lower... I use it to assist fade entry (I use EMA to calculate ATR and 2.25 parameter is Adam Grimes setting).
Momentum... I use to check momentum (strictly speaking, momentum is slope of SMA but I regard the area as momentum).
Small cloud... I use to decide middle term trend and use it as pullback zone.
Large cloud... I use to decide long term trend and sometimes use it as pullback area.
In addition, I use Gann box that customized symmetry.
I prefer Gann box to Ichimoku lagging span.
I painted charts to explain Ichimoku ideas and INCS.
Traders always evaluate the power relationship between bull side and bear side and it needs practice.
INCS, symmetrical Gann box and to measure RiskRewardRatio assist traders with good practice and developing trader's intuition.
Thank you for reading this to the end!!