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In the Forex market, the Heikin Ashi Method is popular as trading the Japanese candlesticks strategy. With it, it is said that patterns, trend reversals, as well as entry and exit positions can be identified easily. For a trader who has a good knowledge of Forex fundamentals, a walk through this complex yet profitable technique is what may be needed.
What Is the Heikin Ashi Method?
The Heikin Ashi Method, or the HA Method, introduced by Munehisa Homma (a successful rice merchant and trader in Japan), is a technique that points out a particular trend clearly. In Japanese, it means “Average Bar”.
Since the method revolves around the idea of noise-elimination in a chart, it can determine a profitable trend, as well as suggest which featured elements are unimportant to a trader. It follows the notion that unless appropriate lines are pursued, observing an error-free trade may be impossible.
A Word of Advice
From a trader, the Heikin Ashi Method requires focus and time investment. It works in conjunction with a time series and thus, a streak of days (at least) is necessary to yield a profitable result. Keeping up with it may be rewarding, however, it can be exhausting; a chief reason why the technique isn’t ideal for a beginner in Forex trading is the fact that it can discourage first-timers.
Time to Calculate
Using the Heikin Ashi Method may be quite direct; if you’re skilled in calculating figures, a challenging time with it is off the table. However, it needs careful attention to details since failure to spot an element in a chart can cause critical errors. Among the signals that need monitoring are big shifts in current price and breakouts.
By using the Heikin Ashi Method, first, you’re required to determine the values of the open HA, close HA, low HA, and high HA. Once the values are in place, you can begin finding an entry position. Then, figure out where to set your stop loss order. Finally, establish a take profit position.
The values:
• Open HA = (Previous bar’s opening price + Previous bar’s closing price) / 2
• Close HA = (Low + High +Opening price + Closing price) / 4
• Low HA = Min X (Low, Opening price, Closing price)
• High HA = Max X (High, Opening price, Closing price)
