The Demerit with the older version of Ichimoku cloud scanner is that there is too much of difference between the cloud(stop loss) and the candle which has been overcome by introducing stop loss for the trade with little modification in the trading rules.
The above nifty chart shows a trailing stop loss(black line) of 6034. But the cloud(6137) is heavily far from the Close value(5751).
Note : Black line indicate only trailing stop loss for trades but not a trailing stop loss mechanism.
1)Buy on Close above the cloud
2)Sell on Close below the cloud
3)Use the Cloud as Stop loss and reverse when the cloud is very near to the candle
3)Use STPL – (Black line) as trailing stop loss when the candle is far from the cloud
4)There is nothing to do with the color of the cloud( red/green cloud it doesnt matter )
5)Red Arrows indicates sell signal i.e candle closes below the cloud
6)Green Arrows indicates Buy Signal i.e candle closes above the cloud
Where STPL is nothing but the average of Close, Span lines SP1,SP2
Few Rules that I for the shorter timeframes 15min, 30min, hourly Charts and Daily
1)Buy or Sell Trade should be taken only on the presence of the appropriate signal. Trade should not me initiated belated to the signal
2)Dont initiate trade without sufficient signals.
3)If you are in a Buy Trade/Sell Trade book the trade if you are in profit at regular intervals. Dont wait for the next signal to exit the trade
4)For 15min trade book profit if you got 20-25pts in nifty and in Hourly Charts – 50-75 points and in Daily Charts – 150-200pts without waiting for next signal.
5)Respect the trailing stop loss when you are in trade
6)If you are confused with the way you are playing – just take rest.
Ichimoku Cloud Scanner – Amibroker AFL Code
If you have a better Stop loss/SAR mechanism please let me know