You’re probably familiar with the Japanese candlestick chart and don’t want to get into the mix of other new things. Then I am sure that you have missed out on an extremely attractive money-making opportunity in trading. That is using the Heiken Ashi candlestick chart for trading. You can take advantage of the pros it offers to make a profit safely in Olymp Trade.
Heiken Ashi candlestick chart – the pride of the Japanese
When it comes to the Oriental school of technical analysis, it is impossible not to mention the Japanese. They are the father of various well-known strategies and indicators. Among them, there are Japanese candlestick patterns or Ichimoku, etc. And the Heiken Ashi candlestick is one of the quintessence they created.
Although highly effective, to use it proficiently, you have to take a lot of practice. Therefore, they are overwhelmed by the popularity and simplicity of Japanese candlestick charts.
Here, I will introduce the advantages and disadvantages of Heiken Ashi drawn from my own trading process. This is for you to have many effective options for observing prices with many different charts.
– Not to be too worried about which technical indicator to choose. Traders often wonder how to set up Stochastic, MACD, Moving Averages, and many other parameters. However, with the Heiken Ashi chart, you only need to care about the candle color. At the same time, you can combine it with trend detection indicators to improve efficiency.
– The Heiken Ashi candlestick will slow the speed of the market more than a normal price chart. It helps to eliminate unnecessary false signals. Thereby, it will limit your trading mistakes and help you identify the trend more accurately.
– The “lubrication price” effect also makes charts smoother, making it much easier for users to observe the market. For experienced traders, this is a huge advantage for following trends. This is because Heiken Ashi candles have partly eliminated short-term false fluctuations that normal Japanese candles cannot do.
– Measure price dynamics: In cases where the market is in an intense uptrend or downtrend, the closing price of a Heiken Ashi candlestick is likely to have no “shadow”. It is because values are averaged from the peaks and troughs, the closing and the opening prices. This is what helps traders determine market dynamics.
– As mentioned above, Heiken Ashi smooths market false fluctuations. However, it also prevents you from reacting in time when a reversal occurs. When using it, you will experience a late trade closure until you see a trend change. So with this type of candlestick, you must define yourself a medium or long term strategy.
– Popular candlestick patterns are harder to spot when you use the Heiken Ashi chart. In fact, not all traders have to struggle. However, the inability to quickly pinpoint important retrieval points at the top or bottom of a trend can be miserable for most traders.
Improve efficiency by combining Heiken Ashi candlestick with other technical indicators
Even the most perfect trading strategies have their weaknesses. To make money in Olymp Trade, you must know how to limit the disadvantages of the trading strategy you are using.
Heiken Ashi candlesticks can overcome the lag, but you need to combine signals from other indicators. It will help to predict the price direction more accurately.
Combine with levels (Support and Resistance)
Support and resistance are historical price zones where price reverses or slows down before the trend resumes which are likely to repeat in the future. Based on that, investors will make favorable decisions for themselves at those levels.
Place an UP order when the price hits the support and is likely to bounce back. At the same time, the Heiken Ashi candlestick chart changes color from red to green.
Place a DOWN order when the price approaches the resistance zone and slows down with the Heiken Ashi candlestick chart turning color from green to red.
Combined with Parabolic SAR indicator
Parabolic SAR is a technical indicator that tends to detect price trends most accurately. And when combined with a Heiken Ashi candlestick chart, it will help you soon catch the beginning and end of a trend. As such, it is an effective trading pair trusted by experienced investors.
Open an UP order when the Parabolic indicator is below the Heiken Ashi candlestick chart while the candles turn from red to green, signaling an impending uptrend.
Open a DOWN order when the Parabolic indicator is above the Heiken Ashi candlestick chart while the candles turn from green to red, signaling an impending downtrend.
The Heiken Ashi candlestick chart is considered a specialty of trend traders. And the indicators will be the spice that makes the dish more attractive and eye-catching. If you are feeling monotonous and need new things to make you profitable, then Heiken Ashi gives you just that.
I have had specific instructions in the article. You can test the effectiveness by trading on a Demo account before using it as a trading strategy to make profits in Olymp Trade.
I hope that next week, there will be materials to make a review of the Heiken Ashi candlestick chart on a Real account. Please follow up.