It is one of the most regularly used technical indicators in modern-day trading. It has its roots in past centuries but reached prominence relatively recently when legendary trader Goichi Hosoda used it for his profitable ‘Hosoda trend’ method back in the 1960s. The indicator itself is based on five essential indicators that are plotted on four different time intervals. It also incorporates two trend lines which are widely known as cloud and baselines.
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An overview of copy-trading
Copy-trading or Mirror trading is considered one of the most powerful ways to generate profit, and it relies on strict discipline and logging. It’s based on keeping track of successful traders and making trades in line with their actions. There are many copy-trading platforms available today that help users exactly do this. Each tool has its twist, but the core idea remains the same: you follow another trader (or multiple traders), copy his actions, so your portfolio is identical to his/hers in terms of positions, and then verify your results against his/hers after some time is over, for example, one month. By doing this, you copy-trade your way to success.
The problem with these tools is that they make it too easy for users to neglect their trades – manual checking of prices and positions every single day can be pretty time-consuming and could eventually lead to forgetting about the overall plan. There’s a lot of action going on at any market condition, but you need your trading plan to be in line with it and profitable in the long run.
The Ichimoku Cloud indicator has many implementations available today (both free and paid versions). But, let’s take a look at the straightforward implementation for this article – the indicator written entirely in C++ language using Qt framework, compatible with all major desktop platforms (Windows, Linux, Mac), and even Android for those who would like to run it on a mobile.
This is an excellent indicator – the only pitfall is that it takes time to understand how it works. Still, once you get used to the idea behind its operation, everything else becomes much more manageable. Best of all, implementing new features comes easy as well – there are no restrictions from the API side. This will be an example of such development without complications.
Let’s start with a short description of the indicator and its key features:
The indicator is based on five essential indicators (Signal, Close, High, Low, and Volume), plotted together as one chart. These indicators can be configured manually by users to make them more personalized for specific needs.
- Each indicator has an array of colors assigned for plotting purposes – such as Signal(blue), Close(red), etc. This enables us to switch between different styles to match different needs and preferences – we could even mix up all available colors without any restrictions or limitations.
- It has customizable line thickness and color/opacity levels for each of the 4-time intervals: 1M, 5M, 15M, and 30M.
- Option to colorize chart by an additional parameter, called ColorBy. You can use the parameter to specify the position of an indicator value on a scale from 0 (inclusive) to 7 (exclusive). This option is beneficial to highlight overbought/oversold conditions or levels considered strong enough to serve as support or resistance.
This feature enables us to build custom Scans using this indicator. You can find examples for different types of scans in articles about the Ichimoku Cloud Scanner project, and it could add even more examples after requests from users. There’s nothing better than experience when it comes to proper scanner configuration.
Plotting all these indicators together ensures that we get the best possible overview of the current market situation and the worst possible number of false signals that could lead to buying/selling at the wrong time or price levels.
One nice feature about this indicator is that it allows us to set up as many as 5 (five) copies of each indicator inside a single chart, but with different parameters for each one. The great thing about this is that we can use all these indicators to feed our Scanner instead of building different scanners for all those parameters – saving tons of development and testing time by doing things like this. Let’s take a look at how we can profit from this.