There are various chart types provided at Olymp Trade. The Heiken Ashi is one of the candlesticks charts. It is a hybrid of the classic Japanese candles chart. In this guide, I will tell you all about the Heiken Ashi charts and also, I will show you how to use it in trading at Olymp Trade.
- 1 The Heiken Ashi candlesticks overview
- 2 Configuring the Heiken Ashi chart on the Olymp Trade platform
- 3 How to trade on the Heiken Ashi candlesticks chart at Olymp Trade
The Heiken Ashi candlesticks overview
At first glance, the Heiken Ashi candles are almost identical to the Japanese candlesticks. Well, they do have a body and the wicks after all. But what is much different is a way they are designed.
The Heiken Ashi candles are based on the calculations of the open and close prices from the former interval, plus the open, close, low and high from the present timeframe. The formula of the Heiken Ashi candles is evaluated as indicated below.
- Close – (open of the present period + high of the present period + low of the present period + close of the present period) / 4
- Open – (open of the former period + close of the former period) / 2
- High – the highest value of the previous period
- Low – the lowest value of the previous period
Such a construction of the Heiken Ashi candles allows them to be an excellent tool for technical analysis of the trend. They help to identify the trend and then to distinguish the possible breakpoints. They will work particularly well for long-lasting trades.
When you look at the above chart, you notice a large number of consecutive candles in the same colour. This is why such a chart is perfect for opening positions for 5 minutes or even more.
Configuring the Heiken Ashi chart on the Olymp Trade platform
You need to be logged in to the Olymp Trade account. Then you simply click on the chart type feature (1) and select “Heiken Ashi” from the available options. The Heiken Ashi candlesticks chart is set.
How to trade on the Heiken Ashi candlesticks chart at Olymp Trade
I already mentioned that the best positions to trade with the Heiken Ashi chart are those of long duration. It means that if you choose 1-minute timeframe candles, you should open the transactions for 5 minutes or more. Be aware, however, you should enter the trade only when there is a solid trend visible. When the bearish and bullish candles appear alternately, do not open the position as there is no trend.
Using the Heiken Ashi candles without any extra indicators
There is an option to trade only with the Heiken Ashi candlesticks. You do not set any additional indicator. You just observe the colour of the candles that are developing one after another.
Take a look at the picture above. It shows a chart with the Heiken Ashi candles only. You can clearly see the market is ranging and there is no significant trend for some time. But eventually, a long bullish candle appears. It indicates the uptrend began to develop. This is the time you should enter a buy position.
If you are using candles with a 1-minute period, you should hold the position for at least 5 minutes. But if you are trading on 5-minute period candles, like in the example above, your trade should last at least 15 minutes.
Trading with the Heiken Ashi candles along with the Stochastic Oscillator
There is yet another possibility of using the Heiken Ashi candles. And this is through adding an extra indicator. I will show you an example of using the Heiken Ashi candles alongside the Stochastic Oscillator. The latter is mainly useful in forecasting the reversal of the trend.
If you are interested in deepening your knowledge about the Stochastic Oscillator, you should definitely read our article about using Stochastic indicator.
Your task is to observe both lines of the oscillator. When they cross each other, moreover, when they run beyond the overbought and oversold levels and then cross, you should enter the trade.
When the %K line cuts the %D line and begins to move below it, this indicates the development of the downtrend. You should, therefore, enter a sell position and hold it at least 5 minutes. In the opposite situation, when the %K line intersects the %D line from below and starts running above it, it will mean the uptrend is coming. This is a good moment to open a buy position that will last 5 minutes or more.
As you can see, trading with the Heiken Ashi candles is not difficult at all. Practice and check if it is something for you. Remember, however, to try it first on the Olymp Trade demo account where you can trade without the risk of money loss. Share your experience with us in the comments section below.
All the best!
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