WHAT IS HEIKEN-ASHI CANDLE AND HOW DOES IT LOOK?

The Heiken-Ashi chart looks like a normal Japanese candlestick chart, but the calculation method to produce a candle is completely different.

If you use the MT4 platform to trade, you can find the indicators available in the software. A brief guide for you to install Heiken-Ashi candles for trading:


Attached is a Heiken Ashi graph template. You download it and follow the instructions below:

1. Copy the file heiken ashi.tpl to the folder containing the template according to the following path: C:\Program Files\YOUR BROKER NAME\templates\

2. Then turn off MT4 and open it again. Right click on the price chart and do as shown in the picture


It will look like this:


And now the main talk begins.

In a normal candle, there are 4 types of prices: Open, close, high and low. Then in Heiken-Ashi it is the same, but the formula is different:

Closing price: Is the calculation of the average price of the open, close, high and low prices.

Opening price: Is the calculation of the average price of the previous candle's opening and closing prices.

Peak price: the high of the Heiken-Ashi candle is selected from one of the highest high, open and close prices.

Low price: the low price of the Heiken-Ashi candle is selected from one of the lowest high, open and close prices.

Heiken-Ashi candles are related because the open and close prices of each candle are calculated using the parameters of the previous candle.

The Heiken-Ashi chart is slower than the regular candlestick chart and its signal is delayed. This is an advantage in many cases when trading with price action.

WHY USE HEIKEN-ASHI? WHAT BENEFITS IT IS?

As mentioned above, it is usually a bit slower than regular candles, so Heiken-Ashi will remove the noise and make the graph smoother and easier to see. (This is important)

+ Heiken-Ashi will be a good tool to trade when the market is noisy or choppy.

+ Heiken-Ashi helps traders avoid getting false signals from the market and bad entry points.

EFFECTIVE TRADING METHOD WITH HEIKEN-ASHI

Having said a lot of theory, anyone who still doesn't understand and doesn't know how to use Heiken-Ashi candles can comment below for specific instructions.

Now comes the most interesting part: sharing trading methods.

Many traders, especially Japanese traders, almost exclusively use Heiken-Ashi for trading. They don't use regular candles, even though it's also Japanese.

But for the studious spirit and likes to use foreign goods like us, people can use both of these charts for trading, for peace of mind, especially for those who are used to seeing Japanese candles.
The system we are discussing today is a combination of three tools: Japanese Candlestick Chart, Heiken-Ashi Candlestick Chart and Stochastic Line (14,7,3).

The method would look like this:

+ Buy when both Stochastic lines (1 fast line and 1 slow line) cross above 20 and both candlestick charts show a reversal signal (reversion signal from Pinbar, Engulfing,...)

+ Sell when both stochastich lines drop below 80 and both candlestick charts show a reversal signal.

Note: we can add Bollinger Bands as a reversal signal for both charts: when the candle moves out of the two bands and beyond the two bands, it is a good reversal signal.
Illustrated as shown below:


Some more examples:


Here is an example for a good SELL command:


Example for a good BUY order:

Rule:

+ Absolutely discipline and patiently wait until all 3 signals appear simultaneously before entering the order. Do not go easy on yourself to destroy the effectiveness of the trading method.

Combined with risk management and capital management methods. Accepting losses is an essential part of life, anyone who wants to trade hundreds of matches should go find a master to learn a course of tens of millions.

+ It is recommended to demo trade first because this method is quite strange to everyone.