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Heiken Ashi or Heikin Ashi is the upgraded version of the candlestick chart. This chart has gained huge popularity among traders as it helps to make informed decisions and analyse security movement properly. In this blog, I will share everything about the Heiken Ashi chart and how you can use it to place high-quality trades on the Olymp Trade platform.
Heiken Ashi chart Key Points:
- The Heikin Ashi chart is an upgraded version of the candlestick chart that produces a candlestick pattern showing the momentum or strength of a trend in the market.
- The Heikin Ashi candles are bit different than the traditional candlestick charts. Unlike, traditional candlestick charts that use the open, high, low, and close price of an asset. The Heikin Ashi candles use a modified formula that provides a smooth representation of the price movements and filter out the market noises.
- The Heiken Ashi chart is considered a bit slower than the standard candlestick chart and due to that some price data may get lost with averaging, which might result in some fake signals.
- Heiken Ashi chart is beginner friendly and is very easy to use and read. when you see two continuous green candles it signals an upcoming bullish trend and vice versa, when you see two continuous red candles it signals an upcoming bearish trend.
Heiken Ashi Candle Formulla
As, I said above the Heikin Ashi candles are a bit different from the traditional candlestick charts. Unlike, traditional candlestick charts that use the open, high, low, and close price of an asset. The Heikin Ashi candles use a mathematical formula. The formula for the Heiken Ashi candle is.
HA_Close = (Open + High + Low + Close) / 4
HA_Open = (HA_Open(previous candle) + HA_Close(previous candle)) / 2
HA_High = Maximum of High, HA_Open, or HA_Close
HA_Low = Minimum of Low, HA_Open, or HA_Close
How to set Heiken Ashi Chart on Olymp Trade?
Firstly, you need to have access to your Olymp Trade account. In case you don’t have one Olymp Trade account. Click here. or sign up via the form below.
You can even sign up from here…try
Firstly, click on register.
Secondly, enter your email, password & hit sign up.
Once you have signed up you will land on the Olymp Trade dashboard.
Click on the chart button and select Heiken Ashi from the menu.
That’s it the basic setup is over!! your dashboard will look something like given below.
You can definitely, set the chart period just click on the timer button and select your desired time.
Heiken Ashi Intraday Strategy
Now, In this section, I will teach you the proven Heiken Ashi Intraday Strategy. This Heiken Ashi Strategy can be used in both Intraday Trading and Swing Trading. However, before I begin there are some rules that need to follow.
Rule: 1. This strategy has worked for me and may or may not work for you. I am not responsible for your loss if any.
Rule 2. Don’t break the rule and trust this system
Rule 3. Don’t try a short time frame chart of 1 min or 5 min. The Heiken Ashi is not made for Aggressive traders.
Heiken Ashi golden rule
Okay, now note down this Heiken Ashi Golden Rule:
- If two consecutive green candle appears then it signals an upcoming bullish pattern.
- Similarly, If two consecutive Red candle appears then it signals the bearish pattern. that’s it!!!
Let’s see some examples:
Given above is a 15 mins chart. and we can clearly see the golden rule has worked properly. The moment two consecutive green candle appears then we see clearly see a pure bullish pattern and vice versa after two consecutive red candles we can see a proper bearish pattern.
Heiken Ashi Swing Trading Strategy
Similarly, Given above is the 1-hour chart of EUR USD and we can clearly the moment two consecutive green candle appears then we see a pure bullish pattern and vice versa, two consecutive red candle appears which signals a bearish trend.
Combining the Heiken Ashi chart with other trend indicators
Heikin Ashi chart is a very powerful chart. However, it is never advised to use this chart solely. You should always use the combination of the Heiken Ashi chart with other trend indicators like RSI, Moving averages & more. Today, In this article, I am going to combine the Heiken Ashi chart with the Stochastic indicator that will provide us with high-quality signals.
Trading with the combination of Heiken Ashi and Stochastic indicator is very easy. You just need to remember the rule of two indicators when you see two consecutive green candles plus the Stochastic line is near 20 It signals a strong bullish trend and conversely, when you see two consecutive red candles plus the Stochastic line is near 80 It signals a strong bearish trend.
Let’s check out some examples.
In ( a ) candle we can easily see two consecutive green candles and the Stochastic indicator shows the oversold level, therefore, you can go for buy trade here.
In ( b ) candle two consecutive Red Candle but Stochastic is near to Overbought level so, don’t go for SELL trade here.
In ( c) candle, two consecutive green candles appear, however, Stochastic is not clearly in the oversold zone, so, don’t go for any trade here.
Homework: Check Your Knowledge
Answer the following:
( a ) Which trade you should take?
( b ) Which trade you should take?
( c ) Which trade you should take?
Comment your Answers below or mail me at Honestdigitalreview@gmail.com
Try the Hieken Ashi Strategy on the Olymp Trade demo account for free. Click here to get started.