Ichimoku Cloud Breakout

Entry Logic

• Exact Entry Trigger: Enter long on a strong candle close above the Kumo (cloud). Enter short on a strong candle close below the Kumo.
• Confirmation: The Chikou Span (Lagging Span) must also be free of price action (i.e., above price for a long, below for a short).
• Timeframe: Daily, Weekly.
• Market Condition: Start of a new, major trend.

Exit Logic

• Profit Targets: Hold until price closes back inside the Kumo.
• Trailing Stop: Use the Kijun-Sen (Base Line) as a trailing stop.

Stop Loss Structure

• Hard Stop: Place the initial stop on the other side of the Kumo.

Risk Management Framework

• Risk Per Trade: 2% of account capital.

Position Sizing Model

• Sizing Approach: Volatility-based sizing (wider cloud = smaller size).

Trade Filtering

• Market Conditions to Avoid: When price is inside the cloud (choppy, no-trade zone).

Context Framework

• Trend Direction: The breakout above/below the cloud defines the new trend.

Trade Management Rules

• Let Profits Run: This system is designed to capture large, long-term trends.

Time Rules

• Session Notes: This is a long-term swing or position trading strategy.

Setup Classification

• A+ Setup: The breakout is in the direction of a "Kumo twist," where the future cloud changes color.

Market Selection Criteria

• Instruments: Any, but particularly effective on forex pairs and indices.

Statistical Edge Metrics

• Win Rate: 30-40%.
• Profit Factor: 3.0+.
• Expectancy: Very high on winning trades.

Failure Conditions

• Strategy Fails: On false breakouts from the cloud.

Psychological Rules

• Discipline: Extreme patience is required to hold trades for weeks or months.

Advanced Components

• MTF Alignment: The weekly cloud should confirm the direction of the daily breakout.

Location

• Strongest: At the beginning of a new secular trend.