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What's Heikin-Ashi Chart?

How Do I Trade with Heiken Ashi Charts

Heikin Ashi Charts look like candlesticks charts - Heikin Ashi Charts are used to predict indices price movement and are aimed at making price analysis much easier to understand and trade using these Heiken Ashi charts as compared to candles charts.

Although Heikin Ashi charts look like candlestick charts, the way they are drawn and calculated is different from that of candlestick charts.

Heikin Ashi Charts vs Stock Candlesticks Charts

Stock Candles Calculation

Every single candlestick graphic intrinsically contains four primary data points: the highest traded price, the lowest traded price, the price at which trading commenced, and the price at which it concluded.

Each candlestick stands alone and is not linked with other stock indices candlesticks – each candle has nothing to do with the candle before it or after it.

Heikin Ashi Charts Calculation

Heikin Ashi candles are calculated using information of the prior candlestick

Heikin Ashi methodology records four key price points for the stock indices: the high, the low, the opening price, and the closing price.

These Heikin Ashi candle price point are calculated as follows:

Opening Price - The official Opening Price is calculated as the simple average of the opening and closing prices recorded during the preceding candlestick period.

The high price of a Heikin Ashi candlestick is determined by comparing three points from the previous candle: its high, opening price, and closing price - whichever holds the highest value.

Low Price. The Heikin Ashi candle's low comes from the prior candle's data. It picks the lowest among low, open, and close prices.

Closing Price - The closing price is found by averaging the opening price, the highest price, the lowest price, and the closing price from the last candlestick.

Heikin Ashi charts give signals more slowly than regular candlestick charts. That's just how their calculation method works.

The slower stock indices signals generated by Heiken Ashi charts can be used to trade the more volatile prices because this Heikin Ashi chart delays in reacting to prices will help stop stock traders from trading indices whipsaw signals.

Heikin Ashi charts produce fewer whipsaw signals due to the delayed calculation of price data.

Unlike regular charts which show many pattern formations, Heikin Ashi charts do not have as many stock market chart patterns.

Stock traders use Heikin Ashi charts to watch trending markets because this indicator waits a bit longer before giving an indices signal and only gives indices signals when a trend has already started.

Heikin Ashi charts help to prevent stock traders from entering the trade too early.

Charts based on Heikin Ashi methodology also assist investors in avoiding premature exits from their trading positions.

What is Heiken-Ashi Chart? - How to Trade Heikin Ashi Charts

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