Heikin Ashi Chart


A Heikin Ashi Chart
At a first glance Heikin Ashi charts are very similar to Candlestick charts. It is also a charting style originally from Japan and uses candles to visualize prices and their movement. Heikin Ashi charts are based on averaged prices, a result of this is the noticeable absence of gaps between candle bodies which makes it easier to recognize price trends.

Like other candlestick charts it gives information about the open, high, low and close prices and about the direction and magnitude of the price movement. It is this wealth of information and the distinct patterns that makes the candlestick charts so interesting. The direction and movement of prices can be better perceived than by using bars. More complex candlestick patterns are often used as the basis for trading decisions.

Formulas

The Heikin Ashi chart type uses the following formulas to compute each candle's values.

In the following equations let open, close, high, low denote the input values and haOpen, haClose, haHigh and haLow the corresponding Heikin Ashi values.For the first candle Heikin Ashi uses for its haOpen-value the open-value of the input, subsequent candles use the arithmetic average of the previous candle's haOpen and haClose-values.

Trading Information in Heikin Ashi


A Single Candlestick
The following information is available in the candle body and the shadows (the lines on bottom and top, also called wicks):
  • The high of the trading period, given by the end of the upper shadow.
  • The low of the trading period, given by the end of the lower shadow.
  • The open price, given by the body edge; either the bottom line in the case of an upwards development, or the top line in the case of a downwards development.
  • The close price, given by the body edge; either the top line in the case of an upward development, or the bottom line in the case of a downward development.
  • The direction of the price movement, given by the body color. Colors are usually red or black for falling and green or white for rising prices. The color settings can be changed.
  • The magnitude of the price movement, given by the length of the body and the shadows. The total length of a candlestick between the wicks is the difference between high and low.
More information can be gathered when several candlesticks are seen in context. Patterns of up to three candles are used to take a closer look at the price movements and their quality. For example, candles with bodies of the same color show more pronounced trends. Trading is often done based on a mixture of candlestick pattern analysis and other methods.

General Chart Properties

When the chart is active, you can edit the chart properties in the toolbox, for example the history length, the axes and legends.

You can also

Content-Dependent Chart Settings

In the properties of the displayed stock (symbol), you can find additional parameters. Besides the Standard Properties, you can find specific parameters for this chart type.

Candles Properties

Border Color - Here you can select a color for the border.

Show Frame - Here you can select whether the candle frame will be displayed or hidden.

Bullish Color - Here you can select a color and opacity for upward candles.

Bearish Color - Here you can select a color and opacity for downward candles.

Indicators and Strategies

In the indicator overview, you can find the indicator Candle Pattern which includes a long list of typical candlestick patterns to choose from. You can edit these patterns in the graph properties in the toolbox. The set pattern is displayed in the graph.

In the strategies overview, you can find strategies such as Candle Bearish Engulfing - Exit, Candle Big White Candlestick - Exit, and many more that you can apply to your candlestick chart.

Links and Books