Understanding Heikin Ashi candles
If you’re looking for a new way to visualize price action on a chart, Heikin Ashi candles might be just what you need. These candles, which are also known as Heiken Ashi candles, were first introduced in Japan in the 18th century. In recent years, they’ve become popular among traders and investors around the world.
Heikin Ashi candles are different from traditional candlesticks in several ways. First, they’re designed to filter out some of the noise that can be found in traditional candlesticks. This means that the Heikin Ashi candles can help you see the trend more clearly. Second, the color of the candles is determined by the trend, rather than by the open and close of the candle. This can make it easier to see changes in the trend direction.
To create a Heikin Ashi candle, you’ll need to start with a traditional candlestick chart. Then, you’ll need to calculate four new data points for each candle: the average price of the current candle, the average price of the previous candle, the average price of the current candle’s high and low, and the average price of the previous candle’s high and low. These new data points are used to determine the open, close, high and low of the Heikin Ashi candle.
One of the benefits of using Heikin Ashi candles is that they can help you spot trends more easily. The candles tend to be smoother than traditional candlesticks, which can make it easier to see when the trend is changing. Additionally, the color of the candles can help you quickly identify whether the trend is bullish or bearish. Green candles indicate a bullish trend, while red candles indicate a bearish trend.
Another benefit of Heikin Ashi candles is that they can help you make better trading decisions. Because the candles filter out some of the noise that can be found in traditional candlesticks, you may be less likely to be whipsawed out of a position. Additionally, because the color of the candles is determined by the trend, you may be able to hold onto a position for longer without getting stopped out.
Of course, as with any trading tool, it’s important to use Heikin Ashi candles in conjunction with other indicators and analysis techniques. They’re not a magic bullet that will make you a profitable trader overnight. However, if you’re looking for a way to get a clearer picture of the trend and make more informed trading decisions, Heikin Ashi candles are definitely worth checking out.
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