Trading With Ichimoku Clouds

First of all, I have to admit I am not a big fan of technical analysis stuff... In fact, I hate those Japanese candlesticks.... Ichimoku stuff? Well, I heard before... I studied before... it made me confused before... and that is why I want to enhance my knowledge on it, LOL.

The opening chapter on Tenkan Sen is contradicting enough. Read this: "I have not experimented with other period values...I do not plan to do so in the future either. I would rather spend my time analysing charts and working with the parameters that have worked and been proven over time. There are five Ichimoku indicators. If you change one formula then you will have to adjust the other formula. How many different combinations do you think there are when you have to alter all five indicators periods? There are thousands..." OK, players all over the world had been debating "parameter" since decades ago.... In fact, there is no absolute answer to tackle this problem. As such, the mind set to stick to default setting is reasonable enough. In my humble opinion, it is not due to the thousand combinations as mentioned. It is more on the facts that no indicators can predict 100%. Hence, certain parameter can work this time, but surely not the other time. End up, we do not optimise for the sake of optimising. In fact, it is much more important not to fall into the trap of "over fitting"...

Unfortunately, this is a book with tons of "over fitting" traps. The author seems to focus on a mechanical system that fits into certain period of time ONLY. The back testing on two years of data is not convincing enough. In fact, I further tested with few more years of data and the outcome is not as great as pointed out. Perhaps, this is why the author needs to provide us with the chapter of "optimising". As usual, I saw more "over fitting" rather than "optimising".

Then, we have this second contradict statement on how to determine a qualified "far": "The problem with looking back historically for a definite value of "far" is that it varies with time. Therefore, the "far" value needs to be adjusted with volatility... One possible rule can be if price is greater than or equal to 1.5xATR, then price can be considered "far" away from Kijun Sen." Ouchhh.... Ok, the author admitted that there is a problem. By then, he successfully found the reason behind the said problem. However, read his solution: "One possible rule", and that possible rule may still subject to time issue since "it varies with time". So, a fixated 1.5 times of ATR could be the solution. Oppsss... "over-fitting" again? Hmm....

Finally, there are some errors here and there. One very good example is the error on strategy description. Two different set of strategy ended up with instrument going higher in both occasions? What a stupid error by the publisher (or author?)!!!

In my humble opinion, this is a real lousy book. End up, explanation given by the authors on Ichimoku can easily be found on google. I believe the author did try his best to present this Japanese mechanism. However, a confused explanation with tons of over-fitting rules simply not enough to bring out the whole concept of Ichimoku. If Steve Nison succeeded in bringing out the best of candlestick, Manesh Patel destroyed the image of Ichimoku indirectly. Having said that, I cannot see myself giving any point to this book. Anybody keen on this book, please contact me asap, LOL...