Learn Online Forex Trading With Heiken Ashi Trading System – Heikin-Ashi charts are easier than candlesticks to understand and trade. In this article, I am explaining about the Heikin-Ashi signals and analysis.
Heiken-Ashi modifies the traditional Japanese Candlestick by sending the open and close through a calculation of the average. This creates a new candle on the chart that many would say is easy to read.
The calculation is simple and you will notice it only affects the open and close of the candlestick:
- Close = (Open+High+Low+Close)/4
- Open = [Open (previous bar) + Close (previous bar)]/2
- High = Max (High,Open,Close)
- Low = Min (Low,Open, Close)
Two benefits of the Heiken-Ashi are the direction of the trend and trend strength.
- The first benefit of Heiken-Ashi is showing you the direction of the trend through color coded candles. The blue candle is showing you the trend is up. The red candle will show you the trend is down.
- The second benefit of Heiken-Ashi is that it also indicates strength of trend. You will notice that many of the candles do not show a wick in the opposite direction of the trend.
This lack a wick is a result of the calculation above to indicate the average price moving in the direction of the trend. So when you see no wick, that means you’re in a strong trend.
When you’re in a trade and you’re unsure of whether or not to exit, consider the Heiken-Ashi candle wick. If the Heiken-Ashi continues to show the trend moving in your favor that is strong then you can confidently stay in your trade.
Heiken Ashi BUY Rules
- Heiken Ashi Candles white color and above Tenkan-Sen line
- Tenkan-Sen line upaward and above EMA 21 line
- Deep Bar Indicator white color
- Momentum Line upward and above 100 level
- Multi info green color
- Signal Trend green bars
Heiken Ashi SELL Rules
- Heiken Ashi Candles red color and below Tenkan-Sen line
- Tenkan-Sen line downward and below EMA 21 line
- Deep Bar Indicator red color
- Momentum Line downward and below 100 level
- Multi info red color
- Signal Trend red bars
The last tip here is that there is no Holy Grail trading strategy.
All the trading strategies are able to locate some buying and selling opportunities, and Heikin-Ashi is not an exception.
It is you who has to master the trading strategies and use them efficiently, otherwise they can’t do anything but making you lose money.