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 stock 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.
Even though Heikin Ashi charts resemble candlesticks charts their technique of drawing and calculation is different than that of candles charts.
Heikin Ashi Charts vs Stock Candlesticks Charts
Stock Candlesticks Calculation
In candlesticks each candlestick has four price points - high, low, opening price & closing price.
Each candlestick is also independent from other stock indices candlesticks - a candle has no relation with the prior candle or the next candle.
Heikin Ashi Charts Calculation
Heikin Ashi candles are calculated using information of the prior candlestick
Heikin Ashi has four stock indices price points - high, low, opening price & closing price
These Heikin Ashi candle price point are calculated as follows:
Opening Price - The Opening price is calculated as the average of the opening & closing price of the prior candle
High Price - the high price of Heikin Ashi candlestick is picked from one of the following information points of the previous candle - high, opening price and closing price - depending on which has the highest value
Low Price - the low price of Heikin Ashi candle is picked from one of the following information points of the previous candlestick - low, opening price & closing price - depending on which has the lowest value
Closing Price - Closing price is calculated as the average of the opening price, high price, low price and closing price of the prior candlestick
Heikin Ashi charts generate signals which are slower as when compared to candlesticks charts and this is because of the technique of calculation used to plot the Heiken Ashi charts.
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 stock indices whipsaw signals.
Heikin Ashi charts have less stock indices whip saw signals because of the delay in calculation of the prices.
Unlike candlesticks that have many candlesticks patterns formation, Heikin Ashi charts have fewer stock indices chart setups.
Heikin Ashi charts are used by stock traders to follow trending markets because this indicator waits a little more before generating a stock indices signal & only generates a stock indices signals when there is an already form trend.
Heikin Ashi charts help to prevent stock traders from entering the trade too early.
Heikin Ashi charts also help to prevent stock traders from exiting the trade too late.
What is Heiken-Ashi Chart? - How to Trade Heikin Ashi Charts
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