The formula to plot Heikin Ashi candle is
- HA Open = (HA Open price 1 bar ago + HA Close price 1 bar ago)/2
- HA Close = (Open + High + Low + Close)/4
- HA High = Highest value of High or HA Open or HA Close
- HA Low = Lowest value of Low or HA Open or HA Close
How to trade using Heikin Ashi candle
Green candle with flat bottom represents trend is going to be bullish.
Red candle with flat top represents trend is going to be bearish
Also, to make your life easier add 50 moving average to the chart and go long when price is above 50 simple moving average and short when price is below 50 simple moving average.
Long call
Short call
The way price is depicted using Heikin Ashi Candles are very different from how the traditional candlesticks plot price. It is because of this calculation that Heikin Ashi candlesticks are used for representing trends that are a lot easier to identify.
Always make sure you use 50 Simple moving average to your chart so that you will know quickly whether the trend is bullish or bearish market and it is very easy to read the market while adding the simple moving average to a chart. Some people use 100 moving average its upto one's chioce what they need to use. For long term actions you can use the 200 simple moving average to check the overall trend of the market.
Adding to this there is another type of moving average which is called exponential moving average where the price discounts some more close ranges in charts Using exponential moving average, the trader will get quick buy or sell call compared to simple moving average.
Apart from using simple or exponential moving averages you can use Heikin Ashi candle chart pattern with normal chart analysis and make money out of it. Also, one can draw trend line, support and resistance lines in the chart and buy the share if price at support and sell when price at resistance that method also you can make money in share market. Flat top red heiken Ashi candle shows trend is weak and flat bottom green candle shows that trend is stronger. Very powerful method of using Heikin Ashi chart pattern is use the trend line, support and resistance and also a moving averages all together if the prices at the resistance level and breaking their nearest support in one time lower from actual viewing chart time them straong bearish movement can been seen and if the prices at the support level and breaking their nearest resistance in one time lower from actual viewing chart time them strong bullish movement can been seen with green heiken Ashi candle. This methid consodered as very powerful call as there are too many confluences in this case.
There are also many type of chart methods in financial markets which are candlestick pattern, bar chart, coloured bar chart, line chart, vertex line, step chart, mountain chat, Baseline, hollow candles, volume candles, coloured high low and close bar, scatter plot, histogram, kagi, line break, renko, range bars and point to figure.
Whatever tricks or analysis you have the very important factor in share market is psychology, discipline and controlling emotions only those who mastered the above three factors can survive in financial markets.
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