Heiken-ashi Candlesticks

Heiken-ashi candlesticks, some call them Heikin-ashi candlesticks.
Heiken-ashi candlesticks provide interpretation of market trends in a neat and descriptive way.

Unlike regular Japanese candles, Heiken-ashi don't show open, high, low and close. Instead they calculate values of each candlestick based on the dominant forces in the market. E.g. if bears (sellers) are clearly dominating, Heiken-ashi candlesticks will be bearish (red), even if a price bar closes higher than it opened.

These Heiken-ashi candles are a perfect tool for traders who like following trends to their very extend. Heikin-ashi Candles also looks much more simplified.

The rules of reading Heiken-ashi candlesticks


Sellers are dominating, strong downtrend



Buyers are dominating, strong uptrend



The trend got a bit weaker, watch out



With a change of a color of a Heikin-ashi candle - trend has changed

Heiken-ashi charts vs Japanese candlestick charts


A regular Japanese candlestick chart:





A chart with Heiken-ashi candlesticks:



The trends on Heiken-ashi charts have more distinguished and smoother look.

But this doesn't limits the use of Heiken-ashi candles in Forex.
Heiken-ashi candlesticks are good at suggesting trading and also trailing stops.

A trailing stop is placed at the bottom of a bullish Heiken-ashi candlestick in an uptrend and at the top of a bearish candlestick in a downtrend. A top is adjusted with each new fully formed candlestick.

Heiken-ashi candles are truly amazing candles to trade!

Note:

The first indicator is a standard HeikenAshi.
The second - its smoothed version. Smoothed heiken-ashi candles are slower to react to trend changes when those occur sharply, but overall smoothed heiken-ashi will keep you in a trend longer. Standard heiken-ashi candlesticks will be changing colors from red to blue and back every time there is a reasonable correction in price.

You can use both indicators simultaneously. Or one on higher time frame - smoother heikin version - for monitoring trends; and one on lower time frame - standard heikin version - to time good entries on pullbacks.

Interesting & helpful replies and articles in this thread which you may like:

See reply no 4 to learn more about Heikenashi Candlesticks and how to use it.

The reason why I like Heiken Ashi is its much less confusing than traditional candlesticks, at least for identifying a trend. And as you said, it works great for setting up a trailing stops.

Great discussion on Heiken Ashi indicator and Heiken Ashi trading strategy. Thanks to you sweetpips.

Those who has the confusion which heiken ashi indicators you will use, I will suggest to use smooth heiken ashi.

More on Heiken Ashi:

Well, its Anna again. I will represent you a very useful indicators this time.

[Collected from online]

Heikin-Ashi - What Is Heikin-Ashi and How to Trade with It?

Author: Vahid

Technical analysis was invented and introduced by Japanese traders and by the invention of the candlesticks. Those who are familiar with the candlestick charts know that it is the best and fastest way for understand the condition of the market and the psychological situation of the buyers and sellers.

Japanese traders didn’t stop improving their technical analysis methods and tools. They worked a lot and tried to make the technical analysis and price prediction easier and faster and Heikin-Ashi chart that came after the candlestick chart is one of the several different achievements of Japanese traders.

I can not say that you can predict faster using the Heikin-Ashi charts but it is easier than candlestick charts. In this article, I explain about the Heikin-Ashi charts signals and analysis and will compare it with the candlestick charts and then talk about my personal opinion about Heikin-Ashi charts and the way that you can use them in your trades.

So What Is a Heikin-Ashi chart and how does it look like?

Heikin-Ashi chart looks like the candlestick chart but the method of calculation and plotting of the candles on the Heikin-Ashi chart is different from the candlestick chart.

In candlestick charts, each candlestick shows four different numbers: Open, Close, High and Low price (It is recommended to learn the candlesticks first) and each candlestick is independent and has no relation with the previous candlestick.

But Heikin-Ashi candles are different and each candle is calculated and plotted using some information from the previous candle:

1- Close price: the close price in a Heikin-Ashi candle is the average of open, close, high and low price.
2- Open price: the open price in a Heikin-Ashi candle is the average of the open and close of the previous candle.
3- High price: the high price in a Heikin-Ashi candle is chosen from one of the high, open and close price of which has the highest value.
4- Low price: the low price in a Heikin-Ashi candle is chosen from one of the high, open and close price of which has the lowest value.

So candles of a Heikin-Ashi chart are related to each other because the close and open price of each candle should be calculated using the previous candle close and open price and also the high and low price of each candle is affected by the previous candle. So a Heikin-Ashi chart is slower than a candlestick chart and its signals are delayed (like when we use moving averages on our chart and trade according to them).

What are the advantages and disadvantages of this delay?

This delay has made the Heikin-Ashi candle as a good indicator for volatile currency pairs like GBP-JPY because it prevents us from rushing and making mistakes amd trading against the market.

Lets see how a Heikin-Ashi chart looks like and compare it with a candlestick chart:



The above chart has two parts. The upper part is the Heikin-Ashi chart and the lower part is the candlestick chart. Numbers 1 and 2 in the candlestick chart show a sell signal whereas if you compare the candlesticks number 1 and 2 with the Heikin-Ashi candles number 1 and 2, you will see that the Heikin-Ashi candles don’t show any sell signal yet. It is just the candle number 3 that shows a signal. So the Heikin-Ashi candles are about one or two candles delayed.

If I wanted to trade using the above chart and with the candlestick chart signals, I would go short when the candlestick number 3 would break the low price of the candlestick number 2 whereas if I wanted to trade only using the Heikin-Ashi chart, I would have to wait for the candlestick number 4 to be formed.

In other part of the chart, the candlesticks number 5, 6, 7, and 8 made another good sell signal. I would go short when the candlestick number 9 broke the low price of the candlestick number 8. But with the Heikin-Ashi chart, I would have to wait for the candle number 9 to be formed completely and also the next candle to break the low price of the candle number 9.

So the Heikin-Ashi chart is delayed and the candlestick chart is much faster and helps us to make more profit. So why should we use a Heikin-Ashi chart? As I have already explained, because of the delay that the Heikin-Ashi chart has, it has less number of false signals and prevent us from trading against the market. On the other hand, Heikin-Ashi candles are easier to read because in contrast with the candlesticks they don’t have a lot of different shapes and formations.

Different candles in a Heikin-Ashi chart:

1- Bullish candles:

When the market is Bullish, Heikin-Ashi candles have big bodies and long upper shadows but no lower shadow. Look at the big uptrend in the below chart. As you see almost all of the candles have big bodies, long upper shadows and no lower shadow.



2- Bearish candles:

When the market is Bearish, Heikin-Ashi candles have big bodies and long lower shadows but no upper shadow. Look at the big downtrend in the below chart. As you see almost all of the candles have big bodies, long lower shadows and no upper shadow.



3- Reversal candles:

Reversal candles in the Heikin-Ashi charts look like Doji candlesticks. They have no or very small bodies but long upper and lower shadows. Look at the reversal candles in the below chart:



How can you use the Heikin-Ashi chart in your trades?

I know that some traders only use Heikin-Ashi to trade but I don’t agree with it. As you saw Heikin-Ashi is delayed. So it is good for trading volatile currency pairs like GBP-JPY and with small time frames. It is good for intraday trading and scalping using small time frames like 5 minutes or 2 minutes. It is not suitable for big time frames like daily and 4 hours because you will be too late in many cases and so you have to close your trade before you make any profit.

Have both the candlestick and Heikin-Ashi on your chart and add a 14, 7, 3 Stochastic. Buy when both of the Stochastic fast and slow lines go up from the oversold area and at the same time both the candlestick and Heikin-Ashi charts show reversal signals. Sell when both of the Stochastic fast and slow lines go down from the overbought area and at the same time both the candlestick and Heikin-Ashi charts show reversal signals.

Look at the below 2 minutes chart and see two short trade and one long trade opportunities:



Two good trades in the 15 minutes chart:



A good short trade in 5 minutes chart:



A good long trade in the 5 minutes chart:



Keep in your mind that you have to try any new system with the demo account and if it worked, you can use it with the real account.

If you use MetaTrader you can download the Heikin Ashi and Smoothed Heikin Ashi from the below attachment. We also included templates for Heikin Ashi and Smoothed Heikin Ashi which you can use with this indicator.

More on Heiken Ashi Candlesticks Chart....

Author: Dan Valcu

What is Heikin-ashi?

"Trend is Your Friend", so Heikin-ashi may change your way to look at markets and charts...

In the summer of 2003, I was researching about Ichimoku technique and by chance (as it always happens) I came across some outstanding charts. The trend was very clear, leaving no room for guessing. I was witnessing Heikin-ashi charts or modified candlesticks.

To my surprise there was no other information available in books or on Internet so I decided to make it available to all traders. In a matter of days I wrote an article for "Technical Analysis of Stocks and Commodities". The article, published in February 2004 as a lead article generated very positive feedback from all corners of the world. Financial sites, technical analysis software companies, and traders all over the world discussed and implemented the technique.

This technique apparently has been developed by a Japanese trader who made a fortune using it and until then was used only by Japanese traders.

Heikin-ashi is a visual instrument to assess trends, their direction, and strength. It is not the Holy Grail of trading, but a great and simple tool to visualize the trend. It is strongly recommended to combine it with technical indicators, patterns, and other trading techniques. The results will improve significantly.



How do we calculate modified OHLC values? Here is the answer:



Heikin-ashi (modified candlesticks) follows six simple rules as shown in the table below:



Use these rules with the charts above and you'll see the difference... Which chart would you consult before trading?

Each trader is continuously looking for that 'extra inch' which gives him or her an advantage in the markets. Heikin-ashi offers you this opportunity. It is not difficult to implement yourself this technique.

Best regards and GREAT trades using Heiken Ashi Candlesticks Chart

A great Heiken Ashi Candlesticks Video trading Strategy by 4xdaytrader2.

Heiken Ashi Buy and Sell display and email alert indicator

First of all thanks to Tonyb123 and Flyer415.

This is a great Heiken Ashi indicator for identifying trend changes with other additional benefits. It has a display alert function and will also send you email alert. If you do not like to spend hours in front of computer waiting for trend changes then its a perfect indicator for you.

You will get the same message in the email alert as you have in the actual alert. Pretty easy to change the message if you so desire.

Also, you must have Alerts set to True as well as Email set to True for it to send an email. The Alerts settings decides if an alert is triggered and Email setting decides if it is an actual alert plus an email or just an alert that is sent.

Hi traders, I’d like to share a simple heiken ashi chart and tricks that produce 250 – 350 pips a week.

1h time frame

Short condition :


Candle at the upper band can’t break the higher high and red stoch has crossed down. Volume down 1 bar.

Open position from second heiken ashi candle and that is 4 pips below the first one.

Place your stop loss 5 pips over the higher high and take profit ratio must be 3-5 times bigger than your risk.

Vice versa for long.

Happy trading!!!!!!