Heiken Ashi Candle Trading Strategies

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Candlestick charts are an essential tool in technical analysis, and Heiken Ashi charts are one of the most popular types of candlestick charts. The Heiken Ashi candlestick chart is known for its unique representation of price trends and patterns, which can be used to develop trading strategies. In this blog post, we will discuss the various Heiken Ashi candle trading strategies that traders can use to improve their trading outcomes.


What is Heiken Ashi Charting? 


Before diving into the trading strategies, let's first understand what Heiken Ashi charting is. Heiken Ashi is a type of candlestick chart that is used to filter out market noise and help traders identify trends more easily. In traditional candlestick charts, each candlestick represents the price movement for a specific period, such as one hour or one day. However, in Heiken Ashi charts, each candlestick represents the average price movement over a specific period.


The Heiken Ashi chart is constructed using a modified calculation of the open, high, low, and close prices. The modified formula helps to smooth out the price action, making it easier to identify trends and patterns. The resulting candlesticks are color-coded to indicate whether the market is in an uptrend or a downtrend.


Heiken Ashi Candle Trading Strategies: 


Now that we understand the basics of Heiken Ashi charting, let's dive into some of the trading strategies that traders can use.


Trend Trading Strategy: 


The first Heiken Ashi trading strategy is trend trading. This strategy is based on the idea that the market tends to move in trends, and traders should look to trade in the direction of the trend. To implement this strategy, traders should look for Heiken Ashi candlesticks that are of the same color and trade in the direction of the trend.


For example, if the Heiken Ashi chart is showing a series of green candles, indicating an uptrend, traders should look for buy opportunities. On the other hand, if the Heiken Ashi chart is showing a series of red candles, indicating a downtrend, traders should look for sell opportunities.


Price Action Strategy: 


The second Heiken Ashi trading strategy is price action. This strategy is based on the idea that price action is the best indicator of market direction. To implement this strategy, traders should look for Heiken Ashi candlesticks that are forming specific patterns, such as dojis, hammers, or shooting stars.


For example, if the Heiken Ashi chart is showing a doji, which is a candlestick with a small body and long shadows, traders should look for a breakout in either direction. A breakout above the doji could signal a bullish reversal, while a breakout below the doji could signal a bearish reversal.


Moving Average Crossover Strategy: 


The third Heiken Ashi trading strategy is the moving average crossover strategy. This strategy is based on the idea that when two moving averages of different periods cross, it can signal a change in market direction. To implement this strategy, traders should use two Heiken Ashi charts with different periods, such as a 10-period and a 20-period.


For example, if the 10-period Heiken Ashi chart crosses above the 20-period Heiken Ashi chart, it could signal a bullish reversal. Traders could then look for buy opportunities. On the other hand, if the 10-period Heiken Ashi chart crosses below the 20-period Heiken Ashi chart, it could signal a bearish reversal. Traders could then look for sell opportunities.


Disclaimer - This is for education purpose and investinstocks do not recommend you to buy or sell based on this article. 



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