Heiken Ashi Strategy – How to Use the Heiken Ashi Indicator in Forex Trading.
This is the second article in our Heiken Ashi series. If you haven’t already we suggest that you check out the first article about the Heiken Ashi Indicator. In that article, we covered the background of the Heiken Ashi indicator, how it is calculated, and how it looks on a chart. Heiken Ashi is said to remove the “noise” from candlesticks and to behave much like the smoothing properties of a moving average. Traders use Heiken Ashi to determine the relative strength of a trend and to pinpoint key turning points in price behavior.
The Heiken Ashi indicator/application tool takes the basic candlestick information, the open, close, high, and low, and then “smoothes” the erratic portions of the chart in much the same fashion as would a moving average. Traders can then make a better-informed decision without the distractions caused by volatile price action.
How to Read a Heiken Ashi Chart.
The Heiken Ashi application reconstructs candlesticks based on mathematically smoothing calculations that are fixed. The “red” bars signify that Sellers are dominating the market, and “white” bars suggest that Buyers are dominant. The Heiken Ashi bars are superimposed over the traditional candlesticks to give a complete presentation. Although it may take time to become familiar with the new chart presentation, one can immediately recognize the price momentum building on each of three downturns that tested the obvious support level at 82.54 for the “USD/JPY” 15-Minute chart.
The key points of reference are when color changes occur, signifying a shift in momentum between Buyers and Sellers. Trends are easier to follow and stick with, especially when another indicator is used for confirmation. The Heiken Ashi indicator works well when support and resistance levels are evident.
As with any technical indicator, a Heiken Ashi chart will never be 100% correct. False signals can occur, but the positive signals are consistent enough to give a forex trader an “edge”. Skill in interpreting and understanding Heiken Ashi bars must be developed over time, and complementing the Heiken Ashi tool with another indicator is always recommended for further confirmation of potential trend changes.
In the next article on the Heiken Ashi indicator, we will put all of this information together to illustrate a simple trading system using Heiken Ashi analysis.
Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.

Forex heiken ashi

Heiken-ashi candlesticks are also called sometimes Heik i n-ashi candlesticks.
Heiken-ashi candlesticks provide interpretation of market trends in a neat and descriptive way.
Unlike regular Japanese candles, Heiken-ashi don't show open, high, low and close. Instead they calculate values of each candlestick based on the dominant forces in the market. E. g. if bears (sellers) are clearly dominating, Heiken-ashi candlesticks will be bearish (red), even if a price bar closes higher than it opened.
These Heiken-ashi candles are a perfect tool for traders who like following trends to their very extend. Heikin-ashi Candles also looks much more simplified.
The rules of reading Heiken-ashi candlesticks.
Buyers are dominating, strong uptrend.
The trend got a bit weaker, watch out.
With a change of a color of a Heikin-ashi candle - trend has changed.
Heiken-ashi charts vs Japanese candlestick charts.
The trends on Heiken-ashi charts have more distinguished and smoother look.
But this doesn't limits the use of Heiken-ashi candles in Forex.
Heiken-ashi candlesticks are good at suggesting trading and also trailing stops.
A trailing stop is placed at the bottom of a bullish Heiken-ashi candlestick in an uptrend and at the top of a bearish candlestick in a downtrend. A top is adjusted with each new fully formed candlestick.
Heiken-ashi candles are truly amazing candles to trade with!
musshan.
You are doing a great job. This work will benefit a lot of New traders like me. I cant thank you enough.
what is the difference between the 2 files above?
HeikwnAshi. mq4 and Heiken_Ashi_Smoothed. mq4? Kindly please explain.
FxIndicators.
The first indicator is a standard HeikenAshi.
The second - its smoothed version. Smoothed heiken-ashi candles are slower to react to trend changes when those occur sharply, but overall smoothed heiken-ashi will keep you in a trend longer. Standard heiken-ashi candlesticks will be changing colors from red to blue and back every time there is a reasonable correction in price.
You can use both indicators simultaneously. Or one on higher time frame - smoother heikin version - for monitoring trends; and one on lower time frame - standard heikin version - to time good entries on pullbacks.
Thank you for these fantastic candles.
Thanks for all your hard work on this site. I'm sure it's helping many of us out there.
Thank-you for your help. May the trading gods smile on you.
FxIndicators.
It's my pleasure to give back the knowledge I have.
trader.
Nice one mate, keep up the good work.
These candlesticks HAVE to be a better way to prevent getting whipsawed out of a potential profit! Easy to understand, and very clear entry/exit patterns. Brilliant, thank you.
it is fantastic.
Thanks great job. i am new. How pls can i get these indicator in my mt4 platform so i can use them.
FxIndicators.
Save it to the folder called /experts/indicators and re-start the platform.
When you place indicator on the chart, you may need to make a few adjustments:
1. Hide your regular candlestick: right click anywhere on your chart, go to Properties. and change colors of the bars to blend with the color of charts background.
2. Switch to the tab "Common", where make sure that "Chart on the foreground" is not selected.
I tried three times to sign up for your list but never received a confirmation . I tried using two different addresses.
FxIndicators.
We don't provide such services, sorry.
Iam new to forex, but this candle pattern introduced by u gives me a well experienced experience.
HeikenAshi Хороший инструмент! Но мало кто его использует, и зря!
HeikenAshi is a good tool! But a few use it, too bad for them!
Hi great info!! One question though, I downloaded the Heiken ashi alert but can't seem to get the alert part to work is there a alert sound or sound file that I should upload or is it going to use the mt4 preset sounds? Thnks.
FxIndicators.
The indicator failed to deliver any sounds. we need to look for another version.
this sounds interesting.
Newbie question, unable to launch heiken ashi chart alone, plse help.
Great thank you for info provided, very useful for me.
But I am newbie, after down loaded this MT4, I pulled a few charts, but it is bar/line/candlestick chart, when drag over the heiken ashi, see overlay on candlesticks, how to take away the candlestick, please advice!
FxIndicators.
Right click on your charts and go to Properties menu.
There change the Color of the Bull and Bear candlestick to match the background, e. g. if you MT4 background is black, change the candlestick color to black to.
Now you can pull up the Heiken-Ashi indicator and enjoy the clear graphs.
Thank for the Indicator, Could you kindly explain one thing in detail how too read the Heiken Ashi Smooth Alert. Could help for filteration ?
keep it up. that is a great job.
Thank for great service .
Please explain about Heiken_Ashi_Smoothed_Alert. mq4. Where to download. mq4 file? How it works? Thank you.
FxIndicators.
The interpretation of Heiken_Ashi_Smoothed_Alert is as follows:
- when the bar is blue - uptrend.
- when the bar has got red on top - downtrend.
The indicator looks to be more sensitive than Heiken_Ashi_Smoothed version, so what it could be useful for:
a) re-entries during strong trends.
but in general, we can't say that it adds any meaningful filters to already existing Heiken-ashi indicators.

Confirm Forex Momentum With Heikin Ashi.
Investors and speculators are always looking for an edge in determining the strength and direction of trends. The Heikin Ashi application is one tool that may be able to provide this edge. Similar to the Ichimoku charts, the Heikin Ashi has been a relatively unknown tool that has recently seen a rise in popularity, even though it has been accessible since its introduction almost two decades ago.
In addition to showing the relative strength of a trend, the application also notes key turning points in price action and reacts much like a moving average. Incorporating the overall session activity in a single candlestick (open, close, high and low), the charting tool also "smooths" over erratic fluctuations in the currency markets and omits spikes that may be sparked by volatility or jumps in price. This allows chartists to obtain a clearer picture of what's going on in the market and to make a more informed trading decision. Let's take a look at how the Heikin Ashi is calculated and how it can be applied to forex trading. (For more insight, read Heikin-Ashi: A Better Candlestick and Trading Without Noise .)
Defining the Heikin Ashi.
The reason the Heikin Ashi tends to be smoother is because instead of using a simple low and high of the session to calculate individual candles, the Heikin Ashi takes the prices per bar and averages them to create a "smoother" session. This is key because the currency markets tend to offer traders more volatility and market noise in the price than other markets. Here is how each candle is constructed:
Close = (Open Price + High + Low +Close) / 4 Open = (Open Price of the previous bar + Close Price of the previous bar) / 2 High = [Maximum value of the (High, Open, Close)] Low = [Minimum value of the (Low, Open, Close)]
By plugging formulas into each individual session to construct consecutive candles, the chart continues to be reflective of the underlying price action, isolating the price and excluding currency market volatility and noise. The resulting picture gives the trader a more visually appealing perspective, and one that can help in identifying the overall trend.
Now that we've established how the candles are calculated, here is how to interpret them:
Positive candles (blue) containing no wicks: There is strong uptrend momentum in the session and it will likely continue. Here, the trader will have a hands-off approach to profits while strongly considering adding on to the position. Positive candles (blue) containing shadows or wicks: Strength continues to support the price action higher. At this point, with upside potential still present, the investor will likely consider the notion of adding to the overall position. A smaller candle body with longer wicks: Similar to the doji candlestick formation, this candle suggests a near-term turnaround in the overall trend. Signaling indecision, market participants are likely to wait for further directional bias before pushing the market one way or the other. Traders following on the signal will likely prefer confirmation before initiating any positions. Negative candles (red) containing shadows or wicks: Weakness or negative momentum is supporting the price action lower in the market. As a result, traders will want to begin exiting initial long positions or selling positions at this point. Negative candles (red) containing no shadows or wicks: Selling momentum is strong and will likely support a move lower in the overall decline. As a result, the trader would do well to add to existing short holdings.
The Heikin Ashi will still take some time to master; however, once this is accomplished, the Heikin Ashi will act to confirm the overall trend of the price action. Now let's see how it is used in market opportunities.
Improve on Opportunities.
Taking a look at the price action, the Australian dollar weakened enormously against a rising Canadian dollar, hence the downtrending channel. Reaching the psychological 0.8300 support, the cross pair presents an opportunity to the speculator. Not only is the AUD/CAD pair testing the support trendline at the 0.8300 level, the potential bottom coincides with the lower channel trendline. Confirming the strength of such a barrier, we overlay the Heikin Ashi and focus on the two dojis that have formed on the chart. The presented signal gives us the best confirmation in this example, as the trade is calling out a long position in Figure 3.
Signaling a potential turn in the price action, the dojis set the trade up nicely. Next, an entry point must be established. At this point, the best entry afforded, according to industry theory, is a break above the high of the session at Point A in Figure 3. This will set the long buy order at 0.8400 with a corresponding stop 2 points, for example, below the low of the session, at 0.8328. Theoretically, the trade is looking to profit, not only on a retracement test of the upper trendline, but a potential break. That's where the profits lie as the break above would create a longer term advance. The idea coincides with what is being viewed on the Heikin Ashi. Over the course of the next month, with the stop fully intact and untriggered as the price never trades back, the long position remains profitable until the creation of another doji near mid month's time. Taking into account the close of the session - including the doji, which is precisely set at 0.8554 - the trade has already profited by 154 points. Looking back, this is more than sufficient, as the risk/reward ratio is well above the 2:1 minimum prescribed. Subsequently, a trailing stop would be perfect at keeping profits close while letting potential unfold in the coming weeks.

Stay in Strong Trends with the Heikin-Ashi Candlestick.
Position Trading based on technical set ups, Risk Management & Trader Psychology.
-Why Mess With a Good Thing?
-The Purpose of Heikin-Ashi.
-Trading With New Vision.
“ You can observe a lot by just watching. ”
Candlesticks are a great tool to help you see sentiment in real-time. However, there is something deeper than what the candlestick is showing you. That something deeper is your fear of being on the cusp of a reversal against your position. Therefore, a false signal of Candlesticks can be costly where as Heikin-Ashi would have likely kept you in the trade as this article will explain. Heikin-Ashi is a free indicator available to be added, like a moving average , to your chart.
Learn Forex: Heikin-Ashi (Right) Smooth Out Trends.
Chart Created by Tyler Yell, CMT.
Why Mess With a Good Thing?
The short answer to this question is that there is a lot of noise with candle to candle price action which can make some candlestick signals misleading. How they are misleading is when you get more noise than signals. Even though candlesticks can help you to find & confirm higher-probability entries when a reversal is shown by other tools or techniques, traders need to be aware of a potential false signal.
Chart Created by Tyler Yell, CMT.
Heikin-Ashi also simplifies the process of visualized trading. If you’re familiar with Candlesticks, you may be aware that there are over a hundred documented Candlestick patterns. This means that not only is it difficult to learn all candlestick patterns, but as you can see above, there not always reliable. The highlighted boxes above are to highlight reversal signals, known as Shooting Stars that did not result in a true market turn and could be seen as noise vs. a true signal.
Bottom Line: Candlestick Trading doesn’t always provide clean signals and can produce noise in a strong trend. Heikin-Ashi can smooth out trends and help you see the bigger, price action picture .
The Purpose of Heikin-Ashi.
Heikin - Ashi is a visualized balanced candle so that you can filter price of the current move for the overall trend. Heikin-Ashi is sometimes known as an average candle to replace or confirm candlestick patterns. As you can see from the calculation, Heikin-Ashi averages out the prior candle to build a bias for the overall trend continuation and the current candle.
Learn Forex: Heikin-Ashi Formula.
Open = [Open (previous bar) + Close (previous bar)]/2.
High = Max (High, Open, Close)
Low = Min (Low, Open, Close)
By looking at the calculations, you’ll be able to see that Heikin-Ashi is a technique which looks at the average price of a candle and uses that to plot the next candle’s open. Because the current candle is plotted based on the prior candle’s average, you’ll notice a sequence of same-colored candle bodies to show a clean trend with longer bodies & candlewicks in the direction of the trend showing you strong trends.
Learn Forex: Few Red Heikin-Ashi Candles Show a Strong Trend.
Chart Created by Tyler Yell, CMT.
Trading With New Vision.
Heikin-Ashi doesn’t look for traditional candlestick patterns. Rather, when using Heikin-Ashi, you’re looking for a strong trend to stay in while always managing risk with a trailing stop. When the bodies get weaker / smaller or begin to change color, then a reversal and / or correction is on hand, it’s time to step aside from the trade as the future is increasingly uncertain in respect to the prior trend you were trading.
The strongest trends are displayed with a shaved Heikin-Ashi candle. If you are trading an uptrend with Heikin-Ashi applied to your charts, and the current candle shows no candlewick to the downside, the trend is very strong and it is best to stay in the trend until either a red candle appears which my preference is or a bottom candlewick forms. This form of trade management provides an active and intelligent trailing stop so that you’re only exiting on a likely consolidation that can chew up time or a reversal is on hand.
Learn Forex: Trailing Stop Example.
Chart Created by Tyler Yell, CMT.
Heikin-Ashi allows you to “trick” your eye to staying in the strong trends that can throw off weak or false reversal signals. This trick is based on averaging the prior candle so that the current price action is only filtered through the prior candle as opposed through the time of the prior candle. If you have trouble jumping out of a trend well before it’s done, Heikin-Ashi could be a helpful indicator for you.
---Written by Tyler Yell, Trading Instructor.
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