Heiken Ashi Strategy – Introduction To Heiken Ashi Candles
Quite often trading the trend gets difficult due to price action that makes trader exit trades early. This mainly happens due to impact of one single candle or bar on Trader’s ability to hold positions. Through Heiken Ashi Candles, this problem is largely addressed as Price Trend is clearly represented through these
Heiken-Ashi represents the average-pace of prices. In Japanese, the meaning of Heikin is ‘Average‘ whereas that of Ashi is ‘Pace‘. So Heiken Ashi Candles essentially captures the pace of price. During trending markets, Heiken Ashi indicator is very useful and gives you insight into Trend & Momentum.
Heiken Ashi Strategy – How To Get Heiken Ashi Charts
For getting Heiken Ashi charts, you don’t need any special software. This is available on most broker’s trading terminals. In case you cannot find it on your Brokers platform, this is available at Trading view dot com and even on Investing dot com. Both these resources are absolutely free. In case you use software’s like Amibroker, Metastock, Ninjatrader you will get Heiken Ashi Indicator tool by default.
Heiken Ashi Strategy – Heiken Ashi Candle Types
Let us now come to the types of Heiken Ashi candles. In this chart, I have done 7 markings to explain the various types of candles in Heiken Ashi. When you spot wide range candles with no tail, consider these as strong up trending candles. Small candles (narrow range) are trend continuation candles representing continuation of trend. These are weak in nature due to their size. I have marked both on the chart below.
Indecision Candles usually have small body and long tail and shadow on both sides. These represent Trend change or pause in Trend. I have also marked out two Bearish Candles that are extremely Strong due to size of candle and range. Such Bearish Candles do not have any shadow.
Always remember, size of body, shadows, and range of candle determines whether it Is bullish, bearish or neutral candle.
5 Key Rules For Heikin Ashi Trader
There are broadly 5 rules that need to be followed when trading with Heiken Ashi Candles. I have listed these below,
Rule Number 1 – Green candles with no lower “shadows” indicate a strong uptrend: When you spot these on charts, be in the trade and don’t think about profit booking. You might want to add to your long position and exit short positions.
Rule Number 2 – Candles with a small body with upper and lower shadows indicate trend change: These are indecision candles and require more confirmation.
Rule Number 3 – Red/Black candles with no upper shadow indicates strong a downtrend: When you spot these on charts, be in the trade and don’t think about profit booking. You might want to add to your short position and exit long positions
Rule Number 4 – Candles with long lower shadows represent Buying interest. Always take note of these candles and assess price action after you spot these candles.
Rule Number 5 – Candles with long upper shadows represent selling interest and be cautious with existing long positions if you spot such Candles.
THESE ARE THE RULES AND BASICS CONCEPTS WHICH CAN HELP BEGINNERS TO START PROFITABLE TRADING …!!!
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