WHAT IS HEIKEN ASHI?

Heiken Ashi (HA) is the Japanese name meaning "average bar". If the normal Japanese candlestick pattern consists of only the opening, high, low, and close of a candle in a period of time, a Heiken Ashi candle will have a slightly more complicated formula. Detail:

1. Closing price of the current HA candle is the average price of the current period's opening, highest, lowest, closing prices (period zero)

HA-Close = (Open (0) + Highest (0) + Lowest (0) + Close (0)) / 4

2. The OPEN price of the current HA candle is the average of the OPEN price of the previous HA plus the CLOSE of the previous HA (period -1).

HA-Open = (HA-Open (-1) + HA-Close (-1)) / 2

3. The current HA candlestick's highest price is the highest among the following data (whichever is the highest): This period's highest price or HA Opening Price or HA Closing Price This (period 0).

HA-Highest = Highest of Highest (0), HA-Open (0) or HA-Close (0)

4. HA candlestick's lowest price as the lowest among the following data: Current period's lowest price or Current HA Open or Current HA Closing (0)

HA-Lowest = Lowest of Highest (0), HA-Open (0) or HA-Close (0)

So we've just passed the part no one wants to read, that's the recipe. Everyone wants to go to the "How to use Heiken Ashi to make money" right away. But first, let's see this first.

HOW TO OPEN HEIKEN ASHI ON METATRADER 4

Metatrader 4 software comes with Heiken Ashi Indicator pre-installed for you, so you do not need to attach it outside. Heiken Ashi is located in Indicators> Custom section


When it was opened, Metatrader 4 required two things to do
  1. Set the background color of the chart to the black
  2. Turn off the Chart on Foreground function and Select Line Chart

So the chart will turn out like this so the Line chart is gone, only the Heiken Ashi remains.

Try to see if the above 2 charts are normal candles and below is Heiken Ashi of the same chart period.



HOW TO READ THE HEIKEN ASHI CHART 

According to Investopedia, there are 5 main signals that help determine the trend and trading ability of Heiken Ashi (colors are based on the image above).
  • White candle (bullish candle) with no lower shadow ==> strong uptrend signal ==> continue to let profit run
  • The white candles show an uptrend ==> people can buy or exit sell orders
  • A candle with a small body and upper and lower shadows indicates a potential trend change. If people like strong feelings, go in early on these candles, otherwise, wait for more signs before making decisions (roughly the confused point of the trend, possibly reversing or going forward).
  • The red candles indicate a downtrend ==> should sell or exit a buy order
  • The red candles and no shadows show a strong downtrend ==> keep selling until the trend ends
Go back to the example image above and take a look


CONCLUSION ON HEIKEN ASHI

Everyone just needs to determine the trend, watch the candlestick, and enter orders. It is advisable to combine HA with some of your other techniques or indicators to increase its accuracy

In general, Heikei Ashi will help you see the main trend and retracement patterns better than using candles.

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