Heikin Ashi Candles Indicator Guideline
Heiken ashi MT4 indicator is a special charting method that you can attach to your main price chart. It resembles the traditional candlestick chart but it is smoother. Indeed, one of the difficulties that face traders in the market is identifying directions. This is because of the forex market volatility. Therefore, the Heiken Ashi MT5 indicator is one of the candles developed by Forex traders to help see past price share changes in the short term. This indicator allows Forex as well as crypto traders to pinpoint the trends easily. In this course, we will explain the Heiken Ashi indicator for Tradingview charts as well as MetaTrader which helps traders to solve the problem of identifying the directions via custom candles.
Heiken Ashi Indicator
What is the heiken ashi indicator ?
The Heiken Ashi is a trading strategy based on Japanese candlestick. Heiken Ashi is a Japanese term that means “average bar”. It was created by Munehisa Homma in the 1700s. But it is more clear than candlestick charts because it takes the average of the price tendencies instead of following every price move. However, this gives the MT5 chart a softer appearance. which makes identifying trends and reversals areas easier, But covers gaps and price data. Forex traders use this strategy to determine market trend signals and predict price movements based on previous patterns.
Moreover, Heiken Ashi is not only a type of chart, it is also a technical indicator, which can be used by cryptocurrency traders in Tradingview, as it takes the current price levels of the underlying asset and transforms them according to the Heiken Ashi formula. The recent price on candlestick price represents the most recent transaction or bit price. while The recent price of the Heiken Ashi chart is the recent calculation of the HA close price.
Heiken ashi candles VS Candlestick candles
Heiken Ashi is another form of candlestick chart which computed in a different way. It differs from the traditional candlestick charts which present current data without any manipulation in the data. In fact, these traditional candlestick charts display the opening and closing prices as the thick part of the candle (real body), and the high and low as the upper and lower shadow, which corresponds to the exact high, open, low, and close values of an asset during a timeframe.
However, HA MT4 charts also have a thick part and upper and lower shadows. But the values used to create the high, open, low, and close for the HA differs from the standard candlestick charts, this means that they don’t use the same values that the underlying asset possesses. In fact, HA based on average prices of the current and previous timeframe, so causes smoother charts.
Heiken ashi chart vs Renko chart
Candlestick and Heiken Ashi help Forex traders to make the right decision. But they are still based on time. and time is considered as a distortion of the activity of the price. So, this provided the birth of Renko charts which concentrate only on the movement of the price. Indeed, the term “Renko” came from the Japanese word “Renga” which implies “brick”. Heiken Ashi charts were built based on the average prices to create candles in a specific time period selected by the trader. However, Renko charts reduce price movements and show only movements of a certain size. These charts (Renko charts) are formed of bricks or boxes of a particular size. You can identify the size or it can be based on the average true range. Moreover, when the price of the underlying asset moves the required amount, a new Renko box forms.
Heikin ashi indicator indicator formula and calculation
Standard candlestick charts are composed of four pieces of price data which are: open, high, low, and close. The Heiken Ashi exhibits some similar characteristics to standard candlestick but utilizes a modified calculation based on two-period averages.
Indeed, there are four formulas for open, close, low, and high to calculate the Heiken Ashi indicator.
- The Heiken Ashi close represents the average of actual bars (high, open, low, and close) of an asset in a specified time period: HA Close = ( high+ open + low+ close ) / 4
- HA open represents the average of the previous HA candle open and close: HA Open = ( previous HA open + previous HA close ) / 2
- And, Heiken Ashi high represents the highest of the 3 current price levels: HA High = Max (high, open, close)
- Then, HA low represents the lowest of the 3 current price levels: HA Low = Min (low, open, close)
Heiken Ashi chart
MT4 Heiken Ashi chart shows two different colors. Green during an uptrend and red during a downtrend. Moreover, it is known for using different colors variants. When the color of the HA candle changes it is an indication that there is a potential change in the trend. In fact, the HA MT5 chart differs from the traditional candlestick charts. It gives a more transparent picture of the movement of the price because it has smoother directional moves with successive bars of the same colors. The traditional chart is very difficult to interpret and identify trends from as it usually changes colors from green to red and red to green. While HA chart reduces the noise in the market by displaying successive colored candles that facilitate the work of the Forex traders which enables them to analyze and identify previous price actions and current trends.
How to trade with Heiken Ashi indicator ?
In the beginning, You need to identify if candles are bullish or bearish. If they are bullish, you are in an uptrend. If these bullish candles don’t have lower shadows, the movement is more reliable. While, if they are bearish, it is a downtrend. If these bearish candles don’t have upper shadows, the movement is stronger. Moreover, if you remark a Doji candlestick you need to be careful of a trend reversal.
Advantage and disadvantages of this indicator
- Accessible by everyone, you don’t need to install it, it can be found on any trading platform.
- Easy to use, any trader can read and understand it.
- Very reliable, because it only utilizes historical price data which gives precise results.
- Filters market noise and reduces small corrections which make the chart smoother.
- Possibility to combine the Heiken Ashi MT4 indicator with other technical indicators to obtain more reliable signals.
- You can use the HA Tradingview indicator at any time period.
- Time lags due to the use of historical price data.
- The absence of price gaps makes it difficult the analyze the price direction, or place a stop-loss.
Download Heiken Ashi indicator for MT4
Heiken Ashi indicator for MT4 is a type of Japanese candles that takes only an average of two periods in Metatrader, instead of all the price activity. which gives it a smoothing appearance. The Heikin Ashi MetaTrader 4 indicator allows changing only in one parameter which is the color.
Download Heiken Ashi indicator for MT5
Heiken Ashi indicator for MT5 is a technical indicator that works to smooth the price action on the candles in Metatrader 5. As you can see in the MetaTrader 5 chart below HA displays uniform colored candles. The white successive candles show a bullish trend. This bullish trend shows no bottom shadow which means that the trend is reliable. While the red successive candles show a bearish trend. And as they didn’t possess up shadows means that the trend is stronger.
Download Heiken Ashi indicator Tradingview
Heiken Ashi indicator for Tradingview is a custom indicator that you can find in the Tradingview candles. HA chart is much easier than the traditional candlestick especially if you are a beginner. It gives a clear view of the price chart which helps you to identify quickly the trends and reversals in the market.
The picture below shows the Heiken Ashi Indicator Tradingview.
Heiken ashi is an effective indicator that everyone can trade with. But you must always be prudent with using it, even with any other technical indicator. Because every indicator which is in MT5 or even Tradingview has its own gap. So I advise you to always be attentive.
- Heiken Ashi is not only a type of chart, it is also a technical indicator for MT5.
- It is a type of Japanese candlestick that takes only an average of two periods, instead of all price activities as the traditional candlestick does.
- HA MT4 indicator based on average prices of the current and previous timeframe. Which causes smoother charts.
- Gives a more transparent picture of the movement of the price because it has smoother directional moves with successive bars of the same colors.
- There are two elements of the Heiken Ashi indicator signals, which are reversals and direction strength.
- This indicator is very easy to use, and available on MetaTrader and Tradingview platforms.