How To Use Ichimoku Indicator MT4

Welcome on our Best MT4 Indicators website. Ask any veteran trader you know, he or she would respond in the affirmative that Japanese candlesticks are the best when it comes to technical analysis. Lately, there is this new technical indicator also from Japan that is taking the forex market by storm.

The indicator is popularly known as the Ichimoku Indicator MT4. While this indicator is specifically designed to help traders follow trends, it can also be used to identify price action from large amounts of data at a glance using graphical elements.

In light of the above, we will take an in-depth look into the performance of the Ichimoku Indicator and how to use the indicator to trade for profits. We will also take a look at the features, benefits, and the different trading strategies that you can apply the Ichimoku indicator to help you mitigate losses. Will this one make our Top 10 Forex Indicators? Let’s get started.

What Is the Ichimoku Indicator?

Designed by a famous Japanese journalist whose name was Goichi Hosoda in the 1930s, the Ichimoku indicator is a flexible but manual technical indicator that helps traders to define resistances, support levels, provide trading signals, as well as identifies trend direction. Hosoda spent close to 3 decades perfecting the indicator before launching it for public use in the 1960s.

The Ichimoku indicator MT4 works very well with any financial instrument and is independent of time frames. While it helps traders to understand the dynamics of the different market; it also empowers them to determine potential opportunities in real-time. Plus, it also allows traders to know exactly when to enter or quit a trade position.

This indicator can be used to show both downtrends and uptrends, but should not be used when you don’t get a clear trend. BTW on our website Best MT4 Indicators you can find many other indicator reviews also on our blog.

Features of Ichimoku Indicator MT4

This tool consists of different elements plotted on a chart. These elements are meant to guide traders to identify where resistance and support lies. These elements also enable traders to figure out whether the market is under consolidation or trending. Below are the features or components of the Ichimoku indicator:

#1. The Cloud or Kumo

The cloud is a combination of two lines, known as Senkou Span A (SSA) and Senkou Span B (SSB). The cloud helps to identify trends.

Signals:

1. The trend is bearish only when the SSA is lower than the SSB
2. The trend is bullish only when the SSB is lower than the SSA
3. The indecision zone or lateral range is when asset prices oscillate in the cloud
4. There is little or no volatility on the market once the cloud is thin
5. There is a lot of volatility once the cloud is wide.

#2. The Fast Line or Tenkan

The fast line or Tenkan is meant to inform traders whenever there is price volatility. Below is the interpretation of the fast line:

1. If the fast line goes up, there is a high chance that the lows and highs are rising
2. If the fast line goes down, it means the lows and highs are also going down.
3. The fast line remains flat only when the market stops falling or rising.
4. The fast line or Tenkan is a highly reactivate line.

#3. The Slow Line, or Kijun Send

The slow line is meant to inform traders about long-term volatility. Below is the interpretation of the slow line:

1. If the slow line goes up, there is a high chance that the lows and highs are increasing
2. If the slow line goes down, it means the lows and highs are also decreasing.
3. The slow line remains flat only when the market stops falling or rising.

#4. The Delay Line, Chikou

This element represents an asset price for the last 26 periods. The delay line is the price’s mirror image. This line is based on the Donchian Channel. If you can analyze the delay line concerning other elements of the Ichimoku indicator, you can detect new trends, and it’s potential.

Analyzing the Ichimoku indicator might seem daunting, but it is easy to use. Fret not about the analysis, as the MT4 platform will handle that for you. Also you can combine the Ichimoku indicator mt4 with other powerfull ones like the hull moving average mt4 indicator.

best ichimoku indicator mt4

Benefits of Using Ichimoku Indicator MT4

Below are the benefits of using this indicator:

1. The Ichimoku indicator can be applied in all known markets – stock, forex, indices, futures, options markets, precious metals (silver and gold), among others
2. It allows traders to quickly understand price direction, trend strength, trend momentum, and to choose trade preferences at a glance
3. It comes with a lot of data to enable traders to make an informed decision
4. It helps traders to identify entry and exit points clearly
5. The Ichimoku indicator also helps to identify false price breaks.

Installing the Indicator

The Ichimoku indicator is pre-built in the MT4 trading platform; hence, there is no need to download it.

1. You can easily find the indicator when you start your MT4 trader.
2. Go to the navigation tab and look for the indicator
3. While there are four sub-folders, the indicator is available in the trend sub-folders. (see the image below)
4. Click on the indicator to activate it on the chart.
5. The indicator should now appear on the chart

You can adjust the default settings to match trading style through the drop-down. Also, the “parameters tab” can be used to adjust the periods. Below are the default values that come with the indicator:

1. Senkou span B – 52
2. Kijun-sen – 26
3. Tenkan-sen: 9

Below is a screenshot showing how the default values have been added to the indicator for the USD/JPY hourly chart.

Trading Strategies

Buy Signal

1. Only place a buy order once you notice that the price has entered the cloud from the bottom.
2. When the price is above the cloud, there is an uptrend in the currency pair

Sell Signal

1. Only place a sell order once you observe that the price has entered the cloud from the top
2. There is a downtrend in the currency pair when the price is below the cloud

Exit and Stop Loss

You can use this indicator to protect your trade by generating take profit and stop-loss orders.

Ichimoku Exit Strategy

You can use the line crossing strategy to determine when to exit a trade position to prevent incurring losses.

Stop Loss

Since the slow line, cloud, or fast like can be used to determine resistance and support levels; the Ichimoku indicator can also be used to place a stop loss to mitigate the inherent risk on the market. Below are areas you can place the stop loss:

1. The opposite side of the fast line
2. The opposite side of the cloud
3. The opposite side of the slow line
4. A few pips below or above the latest low

Combining the Ichimoku Indicator With Other Technical Indicators

Generally, it is a good practice to combine two or more indicators with improving your trading strategies and income. Hence, you can combine the Ichimoku indicator with other indicators like support and resistance indicators.

Summary of Ichimoku indicator MT4

The Ichimoku indicator MT4 is a great technical indicator that can help you plot more information in real-time than other indicators on the market. The indicator displays meaningful information from large data at a glance. Of course, it is good to start with a demo account before switching to a live account. Your confidence will not only improve, but you will also polish your trading skills at no cost.

Meanwhile, you can check other technical indicators to combine with the Ichimoku indicator on our platform. We offer several technical indicators and tools to help you trade smoothly, check them through this link.

And do share your remarks/comments about using the Ichimoku Indicator and the outcome with us using the comment section below. Happy trading!

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