Why We Love Heiken-Ashi Candlesticks!

We love Heiken-Ashi Candlesticks. Learn why they are easier to read and interpret and are more helpful than traditional Japanese Candlesticks.

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Heiken-Ashi means Average-Pace in Japanese. This type of candlesticks are calculated in a different way than regular candlesticks:

1. Heikin-Ashi Close is simply average of open, high, low and close for current period.

Close = (Open + High + Low + Close) / 4

2. Heikin-Ashi Open is average of prior Heikin-Ashi candlestick open + close of the prior Heikin-Ashi candlestick.

Open = (Open + Close) / 2

3. Heikin-Ashi High is maximum of three data points: current period's high, current Heikin-Ashi
candlestick open or current Heikin-Ashi candlestick close.

High = Maximum of High or Open or HA-Close

4. Heikin-Ashi low is minimum of three data points: current period's low, current Heikin-Ashi candlestick open or current Heikin-Ashi candlestick close.

Low = Minimum of Low, Open or Close

Here are the simple rules for using and applying Heikin-Ashi candlesticks:

1. One candle with a short body and upper and lower wicks indicates a potential change in trend. Be careful.

2. Filled candles indicate a downtrend. Add to a short position or exit a long position.

3. Filled candles with no upper wicks identify a strong downtrend. Remain short until a trend change.

4. Hollow candles with no lower wicks indicate a strong uptrend. Stay in position.

Heiken-Ashi Candlesticks are a great tool in your stock charting arsenal and can assist you in finding short chart backups sooner than using the MACD.

Do you have the link to our stock chart layout? If not, FIRST go to FreeStockCharts.com. REGISTER and set up a FREE account. Next, OPEN up the charts and CLICK this link to our most up-to-date layout: bit.ly/CWLayout. Last, SAVE the layout under File, Save As. Now you have it!

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