TOP 3 Heiken Ashi Trading Indicator and Strategy

The Heiken-Ashi technique is a Japanese candlestick-based technical trading tool that utilizes candlestick charts to represent and visualize market price data.

It is employed to identify market trend signals and forecast price movements. The Heiken-Ashi method utilizes average price data to filter out market noise.

The primary contrast between the traditional candlestick chart and the Heiken-Ashi chart lies in the methodology of data representation. While the former relies on open, high, low, and close prices, the latter employs a modified formula based on two-period moving averages.

This modification results in a smoother chart in Heiken-Ashi, facilitating easier identification of trends and potential reversals. Additionally, Heikin-Ashi charts tend to obscure gaps and certain price data, contributing to their smoother appearance.

In the comparison provided, the left chart showcases traditional candlestick bars, whereas the right chart displays Heiken Ashi bars. The visual disparity is evident, with the Heiken Ashi bars appearing noticeably smoother. This enhanced smoothness is a characteristic feature of Heiken-Ashi charts, attributed to their unique computation method utilizing moving averages.

By elucidating these differences, traders gain a deeper understanding of the distinct advantages offered by Heiken-Ashi charts, particularly in terms of trend identification and chart clarity.

When using candlestick bars, traders encounter numerous types of Price Action patterns, such as Doji, Gravestone Doji, Dragonfly Doji, Pin Bars, Engulfing Candlesticks, and many more. The variety of patterns offers insights into market sentiment and potential price movements.

However, when utilizing Heiken Ashi bars, these patterns are condensed into three main types of Price Action patterns:

• 1) Bullish Heiken Ashi Bars

With the Bullish Heiken Ashi Bars, you will notice that there’s only a wick at the top of the bar but there’s no wick at the bottom. As long as this is an up bar with no wick at the bottom, we consider this a bullish signal.

• 2) Bearish Heiken Ashi Bars

The Bearish Heiken Ashi Bars are simply the opposite of Bullish Heiken Ashi Bars. They have a wick at the bottom but not wick at the top. As long as this is a down bar with no wick at the top, we will consider this a bearish signal.

• 3) Indecision Heiken Ashi Bars

To simplify the Heiken Ashi bars, I’ve categorized all bars that have wicks at the top and bottom of the bars as an Indecision Heiken Ashi bar. So regardless of whether the bar color is bullish or bearish, as long as there are wicks on both sides, we will consider this an Indecision Heiken Ashi Bar.

By simplifying the patterns into these categories, traders can swiftly analyze market conditions and make informed trading decisions.

While it may seem appealing to enter a Long position whenever you spot a Bullish Heiken Ashi Bar or to go Short when encountering a Bearish Heiken Ashi Bar, it’s important to resist the urge to do so.

Despite some teachings advocating for such straightforward approaches, it’s essential to exercise caution and refrain from impulsive trading decisions.

To gain an edge in trading the markets, it’s crucial to establish specific criteria that must be met before entering a trade. This ensures a more strategic and informed approach, enhancing the probability of successful trades while minimizing risks. By adhering to a well-defined trading strategy, traders can better navigate market fluctuations and capitalize on favorable opportunities.

• Download “TraderVersity-ZigZagHeikenAshiSystem” (Zip/RAR File).
• Copy mq4 and ex4 files to your Metatrader Directory …/experts/indicators/
• Copy the “TraderVersity-ZigZagHeikenAshiSystem.tpl” file (template) to your Metatrader Directory …/templates /
• Start or restart your Metatrader Client.
• Select Chart and Timeframe where you want to test your forex system.
• Right-click on your trading chart and hover on “Template”.
• Move right to select “TraderVersity-ZigZagHeikenAshiSystem” trading  system and strategy
• You will see “TraderVersity-ZigZagHeikenAshiSystem” is available on your Chart

• Criteria number 1: The higher time frame must be in an uptrend.This criterion entails that the higher time frame, such as the 4-hour chart when trading on the 1-hour chart, should exhibit a pattern of higher highs and higher lows. This ensures that the broader market trend aligns with the intended trade direction, providing additional confirmation for a Long trade setup.

In contrast, trading higher timeframes mitigates the impact of spreads and commissions, increasing the likelihood of favorable trade outcomes.

By minimizing costs and maximizing potential profits, traders can tilt the odds in their favor and improve their overall trading performance.

• Criteria number 2: The last Heiken Ashi Bar on a higher time frame is a Bullish Heiken Ashi Bar. The next confirmation is when the 14-period RSI line is above the level of 50.
• Criteria number 3: The time frame you’re trading on (in this case, it’s the 4-hour or 1-hour time frame chart) must fulfill both criteria 1 and 2.For a valid Long trade setup, both criteria 1 and 2 must be met on the time frame being traded. This ensures alignment with the broader market trend and confirms bullish momentum, enhancing the probability of a successful trade outcome.

Once these three criteria are satisfied, the ideal entry point for a Long trade is signaled when the first Bullish Heiken Ashi candle forms on the next day of the lower time frame chart. The next confirmation is when the 14-period RSI line is above the level of 50. Stop Loss placement is then determined below the low of the current swing low, with a minimum target of twice the established trading risk.

 

• Criterion 1: Confirmed Downtrend on Higher TimeframeThe fundamental principle is to sell high and buy low. Therefore, you must first confirm a downtrend on a higher timeframe (for example, daily chart) compared to your intended trading time frame (for example, 4-hour, or 1-hour chart).

Look for lower highs and lower lows in price action on the higher time frame chart. Imagine this as identifying the overarching bearish trend you’re aiming to ride within your shorter time frame trades.

• Criteria number 2: The last Heiken Ashi Bar on a higher time frame is a Bearish Heiken Ashi Bar. The next confirmation is when the 14-period RSI line is below the level of 50.
• Criteria number 3: The timeframe you’re trading on, (in this case, it’s the 4-hour or 1-hour time frame chart), must fulfill both criteria 1 and 2.

For a valid Long trade setup, both criteria 1 and 2 must be met on the timeframe being traded. This ensures alignment with the broader market trend and confirms bearish momentum, enhancing the probability of a successful trade outcome.

Once these three criteria are satisfied, the ideal entry point for a short trade is signaled when the first Bearish Heiken Ashi candle forms on the next day of the lower time frame chart. The next confirmation is when the 14-period RSI line is below the level of 50. Stop Loss placement is then determined above the high of the current swing high, with a minimum target of twice the established trading risk.

By eliminating market noise, this technique provides a clearer depiction of market trends and direction, facilitating the identification of potential price movements. Traders can then make informed decisions about whether to hold, pause, or anticipate a reversal in a trade. This flexibility allows traders to adjust their positions to avoid losses or secure profits.

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If You can Master this “Smoothed Heiken Ashi COBRA” system, you’ll be able to make so much more money from Trading.

In this tutorial, I will guide you through a simple and effective trading method that can work well for both forex and stock markets. This strategy uses three tools: the 50-period Smoothed Heiken Ashi, the (5,3,3) Stochastic Oscillator, Support-Resistance Zones & Trend Lines.

Let’s start with the basics. The 50-period Smoothed Heiken Ashi helps us see the main trend. When prices are above this line, it’s a good time to think about buying. If the price goes below this line, it might be a good time to think about selling.

Once again, if you can master this “Smoothed Heiken Ashi COBRA System“, you can potentially earn more money from trading. This is because all the tools we use can read price action, market trends, market psychology, and market momentum all at once.

Therefore, it’s important to follow the step-by-step instructions, as there might be a few slightly complicated things, especially when it comes to Stochastic oscillator trading rules and the concept of support-resistance.

 

• Download “TraderVersity-SHACOBRASYSTEM” (Zip/RAR File).
• Copy mq4 and ex4 files to your Metatrader Directory …/experts/indicators/
• Copy the “TraderVersity-SHACOBRASYSTEM.tpl” file (template) to your Metatrader Directory …/templates /
• Start or restart your Metatrader Client.
• Select Chart and Timeframe where you want to test your forex system.
• Right-click on your trading chart and hover on “Template”.
• Move right to select “TraderVersity-SHACOBRASYSTEM” trading  system and strategy
• You will see “TraderVersity-SHACOBRASYSTEM” is available on your Chart

 

Here, we can easily see that the price is moving above the 50-period Smoothed Heiken Ashi. This shows a positive, bullish trend for now.

So, our focus shifts to finding opportunities to BUY.

We do this by using the Stochastic indicator when it’s in the “Oversold” condition and looking for moments when the Support-Resistance Zones and Trend Lines break in a bullish way.

As we can notice, the stochastic oscillator is under the level of 20. This indicates that during this upward trend, the price goes down temporarily until it becomes oversold. This often suggests the market could return to its bullish trend.

As we can see, the stochastic oscillator goes back above the 20 level. With this signal, traders might think about opening a BUY position on the next candle. However, in this strategy, we still require confirmation from market psychology, which comes from a trend line breakout.

On the chart, we can very clearly observe a short-term downward trend line that’s later broken by a strong bullish candle.

This break in the trend line is a reliable sign that the market is continuing its bullish direction.

So, for the next candle, we could consider entering a BUY position. To be cautious, we place a stop loss below the lowest point of the Smoothed Heiken Ashi candle. As you can observe, the price then confidently maintains its bullish trend, and this continues up to the present moment.

On this chart, it’s easy to see that the price is currently moving below the 50-period Smoothed Heiken Ashi. This points to a downward trend. So, we’re focusing on finding opportunities to SELL.

We do this by combining the Stochastic indicator when it’s showing an “Overbought” condition and looking for points where Support-Resistance Zones and Trend Lines break in a bearish direction.

As we can see, the Stochastic oscillator is above the 80 level. This means that even though the trend is down, the price temporarily goes up and becoming overbought. This often suggests the market could go back to its downward trend.

But then, the Stochastic oscillator falls back under 80. This could be a signal for traders to think about opening a SELL position on the next candle.

On the chart, we can clearly see a short-term trend line that was going up, but it’s then broken by a big price drop.

This breaking of the trend line is a valid sign that the market is still on its downward path.

In this case, all the trading rules have been met perfectly. So, on the next candle, we should enter the market by placing a SELL trade.

To be safe, we set a stop loss above the highest point of the Smoothed Heiken Ashi candle. As you can see, the price then continues with confidence in the downward trend.

From the two real-life examples we discussed earlier, it’s clear that this strategy is very strong because it involves price action, market trends, market psychology, and market momentum all together.

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The “ProfitableStrategy_2” shares similarities with the well-known Smoothed Heiken Ashi—but with the right settings, this indicator becomes an incredibly powerful weapon for both forex and stock trading.

There are two crucial things I’m about to show you about the “ProfitableStrategy_2” —and trust me, you don’t want to miss this.

1. First, we’ll dive into how to properly set up this indicator for maximum accuracy.
2. Then, I’ll break down exactly how to read it so you can spot high-probability trade setups with confidence.

Now, let me show you exactly how to set the indicator’s period—and more importantly, how it impacts what you see on the chart.

This indicator is incredibly flexible! You can use it just like a traditional Heiken Ashi indicator by setting the period to 1—keeping it simple and straightforward.

But here’s where it gets even more powerful: increase the period, and suddenly, it transforms! Now, it acts as both a Heiken Ashi indicator and a Moving Average, giving you a deeper, more reliable trend analysis.

Let’s put this to the test! We’ll set the period to 10 and see the results.

And just like that—you can instantly spot market trends with incredible accuracy. It’s like having a roadmap to profits right on your screen!

Incredible, right? This kind of precision is what makes this tool so powerful for traders looking to stay ahead of the market!

Now, let’s dive into these three essential candlestick formations and what they mean for traders.

1. 1. Indecision Candle
   Let’s start with the Indecision Candle. You’ll notice that this candle has wicks on both sides, but one wick is significantly longer than the other.
2. Weak Trend CandleNow, let’s talk about the Weak Trend Candle—a crucial signal that helps traders understand whether a trend is still valid but temporarily losing momentum.This candle has a small body with a wick on one side, indicating that a trend has already formed but remains relatively weak. There are two types of Weak Trend Candles:
   1. BULLISH Weak Trend Candle
   2. BEARISH Weak Trend Candle
3. Strong Trend CandleNow, let’s talk about the Strong Trend Candle—a key indicator that signals when a market trend is at its strongest.This candle is easy to identify because it has no wicks on either side—a sign of pure momentum in one direction.- A Strong Bullish Trend Candle appears as a solid blue candle with no wicks at the top or bottom.
   – A Strong Bearish Trend Candle appears as a solid red candle, also without wicks on either end.

Best NON-REPAINTING Indicator for Forex & Stock Market!

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