How To Read Price Action With Heikin-Ashi | Stock Trading With Heikin Ashi Candles

How To Read Price Action With Heikin-Ashi | Stock Trading With Heikin Ashi Candles


Have you ever heard of the phrase “the trend
is your friend” when trading or investing”? Sure you have. Of course, most profits are generated when
markets are trending, but, I have to disagree with this quote. The correct phrase is “the trend is your
friend, if it can be found”. If you cannot tell if a market is trending
or not, the trend has no use to you, you cannot profit from it. There are many ways that can help you to spot
a trend, and one of the best approaches is with Heikin-Ashi candlesticks. So, today we’ll talk about Heikin-Ashi charts,
you’ll discover the importance of adding them into your trading arsenal and you’ll
learn how to use them to stay on the right side of the market. Before we continue, if you’re new here,
make sure you subscribe, turn on the notifications and leave us a like to show your support. So, Heikin-Ashi is a Japanese technique based
on the candlestick theory but taking it to a higher level for trend determination. Heiken means average and ashi means pace,
taken together Heikin-Ashi represents the average pace of prices. A Heikin-Ashi chart look like the classic
candlestick chart. But the method of calculating and plotting
the candlesticks on the Heikin-Ashi chart is different from the regular candlestick
chart. On the candlestick charts, each candlestick
is independent and has no relationship with the previous or next candlesticks. But Heikin-Ashi candlesticks are different
and each candlestick is calculated and plotted using some information from the previous candlestick: 1. Open price:
The open price in a Heikin-Ashi candlestick, is the average of the open and close price
of the previous candlestick. 2. Close price:
The close price in a Heikin-Ashi candlestick, is the average of the open, close, high and
low prices. 3. High price:
The high price in a Heikin-Ashi candlestick, is chosen from one of the high, open and close
price of which has the highest value. 4. Low price:
The low price in a Heikin-Ashi candlestick is chosen from one of the low, open and close
price of which has the lowest value. The major difference between Heikin-Ashi and
regular candlestick chart is the way up candles and down candles are formed. In order for an up candle to form on a traditional
candlestick chart, the closing price must be above the opening price; a down candle
forms when the closing price is below the opening price. In a Heikin-Ashi chart, an up candle forms
when the price closes above the midpoint of the prior candle and a down candle forms when
price closes below the midpoint of the prior candle. This important difference is why Heikin-Ashi
charts make it easier to spot the current trend. So candlesticks in a Heikin-Ashi chart are
related to each other, because the open price of each candlestick is calculated using the
previous candlestick’s close and open prices. Also the high and low prices of each candlestick
is determined by the previous candlestick. So a Heikin-Ashi chart is slower than a candlestick
chart and its signals are delayed. They work somehow like a moving average. When reading these candlestick charts, there
are a few important things to pay attention to. The size of the candlestick, the relative
direction of the candlestick, and even the color of the candlestick (red versus green)
can all help traders draw conclusions about what trends may be occurring. The charts themselves can be easily adjusted
depending on the desired timeframe used by each trader. Five minute, fifteen minute, hourly, and daily
Heikin-Ashi candlesticks are all among the most commonly used. When the market is bullish, Heikin-Ashi candlesticks
have big bodies and long upper shadows, but no lower shadow. Pay attention at the big uptrend in this chart. As you see, almost all of the candlesticks
have big bodies, long upper shadows and no lower shadow. At first glance, the bullish Heikin-Ashi trend
looks like a normal Japanese candlestick trend. However, you will notice that the Heikin-Ashi
trend is built primarily by bullish candles and is absent of lower candlewicks. When the price is shooting up, the price action
creates very little to no lower shadows. When the market is bearish, Heikin-Ashi candlesticks
have big bodies and long lower shadows, but no upper shadow. So here is a big downtrend and as you see,
almost all of the candlesticks have big bodies, long lower shadows and no upper shadow. This indicates that the declining momentum
is very strong. Reversal candlesticks in the Heikin-Ashi charts
look like regular doji candlesticks. They have no or very small bodies but long
upper and lower shadows. The doji, when it appears after a directional
move, has a reversal potential and indicates that the price action is stalling and might
be poised to start a counter trend move. So, in short how do you analyze a Heikin-Ashi
chart? It’s simple. When prices are trending up, Heikin-Ashi bars
have no lower shadow. When prices are trending down, Heikin-Ashi
bars have no upper shadow. Doji bars with both lower and upper shadows
are possible turning points and can also appear during choppy price action. Now, Heikin-Ashi chart is much smoother looking
in terms of price action. Easier to identify trend and profit from it. But the problem is that Heikin-Ashi candles
do not show true prices. Yes, we derive these candlesticks from true
prices, but we need to treat it as more of an indicator than a price chart itself. So, that’s why it’s very important to
highlight the pros and the cons of using Heikin-Ashi . There are a few benefits to the Heikin-Ashi
chart that can be seen immediately. The first is the smoothness. The Heikin-Ashi chart creates a much smoother
flow of price movement without the gaps and choppy movements typical price action can
make. Heikin-Ashi indicator compared to the regular
price chart slows down the speed of the market, eliminating unnecessary false signals. Also, it’s easy to read trends: both the
size, direction, and color of a Heikin-Ashi candlestick will tell you a lot about the
trend in a short amount of time. This is extremely valuable for day traders
who need to make quick decisions. Another advantage of Heikin-Ashi is the fact
that it will allow you to stay in the trade without being nervous or making any unnecessary
moves. Also, the adaptability is another benefit. The “trading period” on Heikin-Ashi charts
can be easily adjusted to reflect different time periods. Some traders will look at 15 minute and daily
charts side by side in order to develop a more comprehensive analysis. These charts can also be applied in many different
markets including stocks, forex, indexes, and various others. However, a Heikin-Ashi chart has some disadvantages:
Every indicator that is based on slowing down the signals does its best on trends only. Heikin-Ashi smoothed signals don’t let you
to notice the reversal in time. Any Heikin-Ashi strategy should take into
consideration that lagging indicators not only dismiss useless signals to open the trade
but also provide you with a late signal for closing the trade. That is why you will often see the market
slowly destroying your profit and later on, you will understand that the trend has already
changed. In other words, don’t rely too much on Heikin-Ashi
when you want to take your profits. Another important drawback is the fact that
this indicator does not fit short-term and scalping strategies. I’ve talked with many traders that used
Heikin-Ashi on the 1-min or 5-min chart, trying to scalp the market, and all of them were
disappointed. So, short term trading could be inefficient
when using Heikin-Ashi . Now, developing a Heikin-Ashi trading strategy
is surprisingly easy. These charts rarely contradict other technical
indicators, rather, they simply amplify the trend to make it easier to identify. When used correctly, Heikin-Ashi charts are
incredibly reliable. If your goal is to catch longer and persistent
trends, then using a Heikin-Ashi chart will help you toward that end. A simple way to use Heikin-Ashi is to add
them to a h4 or daily chart and apply price action rules. On higher timeframes like the 4 h or d1, the
Heikin-Ashi trading style puts an emphasis on persistent trends. Small corrections and consolidations are left
behind and they are barely visible on the chart. You will notice that when the direction changes
on a Heikin-Ashi graph, the price most likely starts a new move. This helps to distinguish between the potential
beginning and the end of a trend. Since chart noise is filtered, you basically
see the naked trend. Heikin-Ashi charting is very powerful when
combined with price action analysis. Look for the emergence of new trends, or for
the reversal of already existing ones. Look for support and resistance levels and
important swing points, and keep in mind that these could act as future turning points on
the chart. Now, if you found value and learned something
new, make sure you subscribe to our channel, turn on the notifications so you don’t miss
future uploads and leave us a like to show your support. Until next time

79 Comments

  • Matt Schneider

    July 22, 2019

    1st!

    Reply
  • GGS

    July 22, 2019

    Shall we use Heiken ashi as a confirmation indicator or we should as a main indicator

    Reply
  • simone neft

    July 22, 2019

    I adore this channel! Great video!

    Reply
  • Ryder Paul

    July 22, 2019

    Really good video, never understood these ashi candles. Like the fact you spoke about price action. Thanks for the great content!

    Reply
  • ZEN.Trader A.

    July 22, 2019

    Learning new things every week from you!!

    Reply
  • edbert fh

    July 22, 2019

    I still confuse using heiken ashi because the bar not print real price

    Reply
  • Djibouti13DBLE

    July 22, 2019

    I'm never disappointed. Always the same high quality. Thanks!

    Reply
  • Abhijit Ghate

    July 22, 2019

    As usual, another perfect video delivered.

    Reply
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    July 22, 2019

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  • Sudheer Naidu

    July 22, 2019

    Nothing to speak…only claps for your content.

    Reply
  • Andy Castro

    July 22, 2019

    how to use bars trading

    Reply
  • Jason Gagnon

    July 22, 2019

    Another awesome informative video. Thank you!!!!!

    Reply
  • Gvozden Krajči

    July 22, 2019

    Great video. This is the time to stop gambling money and looking at prices all day by building a rock strong winning strategy and start making profit by sticking to it. The key is to do this without emotion as this is the biggest self setback as a business person. Some people are still waiting for a correction to start buying bitcoins and others are waiting for a major bull run to start making profit but those approaches are wrong and my portfolio is a testimony to that. I actually may not be as good as i sound but i am smart. I researched and follow Keith Ryan for trade patterns and signals which have been so accurate, easy to use and good my portfolio is exploding with profit. I suggest him [email protected] for all who seriously want to make incredible profit from bitcoin without having to just buy and hold which is easiest to do but very unproductive right now and most likely in the future

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  • Scorpie Scorpie

    July 22, 2019

    Which do you prefer more? Heiken ashi or Parabolic Sar?

    Reply
  • desertjedi

    July 22, 2019

    Very well-presented information. One of the best videos on HA candles I've seen. The HA candle "indicator" for MT4 is poorly coded – it drives you nuts when you try to change candle color and width. If you Google the issue, there's a link on fixing this in the MetaEditor. I did this for both for HA candles and the Smoothed HA Candle "indicator".

    Reply
  • Jovan Ru

    July 22, 2019

    Great video, thank you, keep up with the good work!
    Are you planing some forecast, analysis videos in the future?

    Reply
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    July 22, 2019

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    Reply
  • nilbert pacheco

    July 22, 2019

    My thanks for showing this video…

    Reply
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    July 22, 2019

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    July 23, 2019

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  • LenS GRDN

    July 23, 2019

    Thanks a lot. I'm not easy with H.A. I tried this method but not. I prefer use Renko with moving average. Or renko and ichimoku

    Reply
  • FinBrain Technologies

    July 23, 2019

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    July 23, 2019

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  • Ronnie Harris

    July 23, 2019

    your videos are probably the best on YouTube really. Thank you sir.

    Reply
  • Dee Parsons

    July 24, 2019

    You are truly gifted – taking complex topics and summarizing in a clear and concise 10-ish minute video…thank you for all you do for the trading community…please please please keep up the amazing work!

    Reply
  • David Patterson

    July 24, 2019

    If you find it too hard to see a trend with traditional candles, may trading isn't the best thing for you.

    Reply
  • Phoenix 23

    July 24, 2019

    Wow excellent explanation.tnx

    Reply
  • Thomas Pham

    July 24, 2019

    I liked the vid. Thank you. This was good info and I'll use it when trying to understand charts for longer term trades.

    Reply
  • Melz Redrum

    July 24, 2019

    I add auto fibo with HA.

    Reply
  • Sharad Forbes

    July 24, 2019

    What time frem in intrday treader

    Reply
  • Yonathan

    July 24, 2019

    What I really recognize from your video aside from the lesson is your accent on english is very much well improved man!, good job your lesson helps me a lot, thanks man !!

    Reply
  • David B

    July 25, 2019

    Super clear and well-organized explanations. Subscribed!

    Reply
  • Dridex

    July 25, 2019

    I love the quality of your videos and how you break everything down, so happy i found your channel. Keep em coming! 🙂 Thank you!

    Reply
  • milind bhuvad

    July 25, 2019

    Plz hindi sir

    Reply
  • Mizanur Rahman

    July 25, 2019

    Thanks for your video, your videos are always best about learning the Forex analysis. Which indicators we SHOULD use with Heikin Ashi for confirm the trend more correctly? Please reply

    Reply
  • Hassan Hamid

    July 26, 2019

    The problem with traders today is they think they're too smart they know what they are doing, reading a bunch of charts, watching videos, following news or a making a few profit doesn't make you a pro. Stop overestimating yourself and seek proper guidance, my account is up by $8560 since I started trading with Mr Andrew Feldstein Seek his guidance don't be a dud and lose all your hard earnings before you realize you're broke. contact him on his Email Via:<[email protected] com > he will Teach you how to trade with the best signal, profitable and reliable trading platform.

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  • Mar'yan Kitsenko

    July 26, 2019

    I really liked the part about how to read the HA charts and how to spot a potential reversal. Thanks!

    Reply
  • sundher g

    July 26, 2019

    Clear explanation. Learned lot about reading HA chart. Nice

    Reply
  • NIKHIL DUDHGAONKAR

    July 27, 2019

    Thanku sir make video on supertrend

    Reply
  • Roz Bailey

    July 27, 2019

    Exactly the lesson I needed to gain quick and well explained Heiken Ashi. Thanks

    Reply
  • Marc Duchamp

    July 27, 2019

    In other word it’s going up or going down

    Reply
  • Jinu

    July 27, 2019

    Dialogue dosa

    Reply
  • C B

    July 27, 2019

    When you see someone posting their email here in the comment section, it’s 1000% scam. Don’t fall for it. Lol

    Reply
  • Sung sam

    July 28, 2019

    Has anyone made any money using this read and verifiable with real money real money I the bank to prove this method works over test of time?

    Reply
  • Leena Zen

    July 28, 2019

    It would be great if you could take the lesson with the things you have done
    But when we enter the market open, it becomes negative. This indicator changes the color of the candle once in a while and is not unstable because when we become an entry in the market, its trend is negative

    Reply
  • Robert Navas

    July 29, 2019

    BO had been difficult but since I got help from Olivet everything trade turns Gold

    Reply
  • Khadija Sutherland

    July 30, 2019

    I was trading on leverage 100:1 using a particular broker I kept on losing consistently this trend went on several times until sir beckford came into the picture and brought me into the light. He’s been my mentor for about 8 months now and I have made over 40,000$ under his guidance.

    Reply
  • Gypsy Malone

    July 30, 2019

    To much information in to short a time

    Reply
  • T-Chris

    July 31, 2019

    Ich liebe diesen Kanal! Genau das Richtige als Trader

    Reply
  • In Penny Stock

    August 1, 2019

    Nice video

    Reply
  • Ronni Zag

    August 9, 2019

    Great video but i have a note here, the one minute chart on heikin ashi let me develop a system that givesme 100 % profits easily on leverage trading platforms. It works like magic on one minute. No its not that fast.

    Reply
  • pritom chowdhury

    August 11, 2019

    Great

    Reply
  • mutaz kanaan

    August 11, 2019

    bravo

    Reply
  • Girish

    August 12, 2019

    Thank you so much for explaining it very clearly and concisely! Personally I’ve been using this as an exit indicator and I do agree that sometimes it eats into the profit potential because it’s a lagging indicator. Which indicator would you recommend as an exit indicator. Something that doesn’t make me exit too early or too late?

    Reply
  • Spread Love

    August 14, 2019

    Thank you Sir!

    Reply
  • Kim Sung je

    August 15, 2019

    Don’t panic, I have learnt to control my emotions while trading. Losing consistently doesn’t make you cursed it’s only based on experience and I have the right guide to help you win more.

    Reply
  • Lekster

    August 18, 2019

    At 9:52, what do you mean by "apply price action rules"? Is it a setting in the TravingView Heikin-Ashi chart or something else? Thanks!

    Reply
  • Andyman

    August 19, 2019

    Hi, you could make a video about Heiken Ashi Smoothed candles. Thanks

    Reply
  • Zenie Pagatpatan

    August 27, 2019

    earn money with this browser download now

    Reply
  • justanotherbum007

    August 27, 2019

    Comments spammed by scammers

    Reply
  • ش faudel

    September 1, 2019

    Successful trading requires a clear system that takes into account the possibility of losing trades, and also aims to preserve a mental equilibrium that prevents a trader from becoming too emotional during their trading hours. it is possible to become successful, but not without a strict system and the ability to follow that system. The only sucessful system I'd recommend to anyone is the IQD strategy from Lukasz Wilhelm. It is glorious !! Reach out to Lukasz Wilhelm, he is taking 500 new student for a millionaire challenge

    Reply
  • sommi

    September 2, 2019

    🧡💛💚💙 When your girlfriend wont shutup you pull your dick out and slap her in the face with the Heikin Ashi candle power 🧡💛💚💙

    Reply
  • sommi

    September 2, 2019

    🧡💛💚💙 Heikin Ashi can be used to trade in 1-minute or 5-minute timeframe, however you need to add other indicators to aid you. Also you should focus on the Higher Time Frame. Products with high volatility are suited to Heikin Ashi in 1-min and 5-min timeframe because there is a chance the trend will burst in your favour. Trading low timeframes is situational and you need to be following the higher order, or you will get dumpstered. Check the Daily trend before diving into a 5-min trade 🧡💛💚💙

    Reply
  • bit exchange

    September 3, 2019

    amazing…. thank u sir. simple tehnik but profitable…….wowwww

    Reply
  • hiiiihhhaaaa

    September 3, 2019

    I scalp on the 1 minute heiken ashi while monitoring regular candlestick on 5 min chart and 10 seconds chart. My trades rarely last over 10 minutes unless the trend is very strong. The main advantage i find with these is it reduce anxiety, i can just go with the flow of prices without really having to care where it's going.

    Reply
  • Rajiv sharma

    September 8, 2019

    i trade with haiken ashi 1 minute time frame along with macd and stochastic indicatiors and my trades are 95% true.

    Reply
  • mostafa nayl

    September 9, 2019

    Thanks
    Wanted to make sure of something..

    Not to use this indicator on lower than 1H frames., correct? Because maybe when i get entry signal,… On real price chart the direction might be reversed already.
    But how to avoid that on even higher frames?

    The support and resistance we see on this indicator, will ne actually different in position on the real price chart. Correct?

    Reply
  • why trade stocks when you can trade OPTIONS

    September 15, 2019

    thank you

    Reply
  • Amir Williams

    September 17, 2019

    Learned a lot on this video. Thank you!

    Reply
  • Milind Joshi

    September 22, 2019

    sir make on bollinger bands

    Reply
  • Vivek Vatve

    September 26, 2019

    Very well explained!

    Reply
  • Ryan Beseke

    October 1, 2019

    Bro, you can't say that the Heiken Ashi candles are independent and have no relationship with one another when they are clearly dependent on the previous candle and do relate in some form. Holy smokes…

    Reply
  • Yaro Aram

    October 4, 2019

    I used to do more scalping and day trading since it simply worked better for me.
    untill i found those heiken ashi.
    Now i trade mostly 4 hour and daily charts.

    Reply
  • Артур Андрющенко

    October 6, 2019

    Bro. Were are you from

    Reply
  • TopMaster Class

    October 11, 2019

    loose? if you have good strategy just wait for the next signal that it the main rule.

    Reply
  • Peyman Kazemy

    October 16, 2019

    It was great but too much adds

    Reply
  • Daniel Medeiros

    October 18, 2019

    Asmr

    Reply
  • konsta phiney

    October 23, 2019

    I'm extremely grateful for the strong positive effect Mr Maayan ahmed has made in my life as a person, there's no better way to say this, with his trading strategy, he has helped me make sense of my business and now my account is a six figure account.

    Reply
  • jason archer

    October 26, 2019

    Great video. Now subscribed.

    Reply

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