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Black Dragon

The Black Dragon is an expert adviser that uses the traditional trading strategies and signals of the Ichimoku Kinko Hyo indicator system to place and manage trades. This is not a fully automated EA, although you can use it as such, it has actually been designed to be used as a tool for Ichimoku traders to place and manage trades. The Black Dragon has five of the most well known strategies to choose from along with four different confirming signals all from the Ichimoku. There is the Kumo Breakout, The Chikou Cross, Chikou Breakout, Tenkan-sen Kijun-sen Cross, and the Price Kijun-sen Cross. You can select one of these primary strategies and two confirming signals. The signals to choose from are the position of the Chikou to the kumo, The Price position to the kumo, the Tenkan-sen Kijun-sen cross, and a kumo twist. All these strategies and signals are well known and a quick internet search can give you all the info you need on how to use them.

As an example, an Ichimoku trader looks at a chart and sees that the price has pulled back from its trend and is consolidating. Wanting to take this trade he now looks for an entry with the Ichimoku and sees that once the price breaks out to resume its trend it will cleanly cross the Kijun-sen line. This is a classic and powerful signal that Ichimoku traders have used for decades. To take this trade with the Black Dragon the trader would set the primary strategy to PriceKijunCross, with two confirming signals of his choosing, such as kumo twist and Chikou Kumo Relationship. If the confirming signals are true when the price crosses the Tenkan-sen line a trade will be placed. The Black Dragon will place a stop loss to a multiple of the Average True Range and select a lot size according to the level of risk the trader sets for the trade. it will then close the position once the price closes beyond the Tenkan-sen line.

The Ichimoku trader finds the trade, the Black Dragon manages the trade.


Strategies

  • The Price Kumo Breakout: a breakout strategy, a trade signal is generated when price action breaks out of the kumo. The price must open inside the kumo and close outside of it.
  • Chikou Kumo Breakout: similar to the price kumo breakout, a trade signal is generated when the Chikou breaks out of the kumo.
  • Chikou Price Cross: a breakout strategy from a price consolidation pattern. A trade signal is generated when the Chikou span crosses through price action.
  • Tenkan-sen Kijun-sen Cross: a trade signal is generated when the Tenkan-sen line crosses through the Kijun-sen line, similar to a golden cross death cross trade.
  • Price Kijun-sen Cross: a trade signal is generated when price action crosses through the Kijun-sen line.

A wise Ichimoku trader will always weigh these trade signals in the light of the overall picture painted by the Ichimoku Kinko Hyo. That is why we always use confirming signals and never place trades in isolation.


Confirming Signals

  • Chikou Kumo Relationship: When the Chikou span is above the kumo it adds strength to a bullish trade. Likewise, when it is below the kumo it shows a bearish bias.
  • Price Kumo Relationship: When Price is above the kumo it says price action is bullish and when it is below the kumo it is bearish (these first two signals are the most used confirming signals).
  • TK Cross: When the Tenkan-sen crosses up through the Kijun-sen it is a bullish signal, when it crosses down through the Kijun-sen it is a bearish signal.
  • Kumo Twist: When the Senkou Span A is above the Senkou Span B it is a bullish signal and when it is below, it is bearish.


Inputs

  • Primary Ichimoku Strategy: This is where you select the primary trade signal from one of the five strategies
  • First Confirming Signal: Choose from one of the four confirming signals
  • Second Confirming Signal: Choose from one of the four confirming signals. If only one signal is desired then set this one to the same as the first signal
  • Stoploss risk % of account balance: risk money, set the desired risk percentage of your account balance you wish to use on the trade, entered in decimal format, .02 = 2%
  • ATR Stop Multiple: the number used to multiply against ATR to set stop loss. Stop loss distance set at 1xATR, 2xATR, ..., ...
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