Heikin Ashi candles are a powerful variation of traditional Japanese candlestick charts used in technical analysis. The term “Heikin Ashi” translates to “average bar” in Japanese, which reflects how these candles are calculated to smooth out price action.
Highlight: Heikin Ashi candles make it easier to identify market trends by filtering out short-term fluctuations.
Heikin Ashi is widely favored by traders in forex, crypto, and stock markets who want a clearer view of the market’s direction without being distracted by noise.
Heikin Ashi charts were introduced to offer a more readable alternative to the standard candlestick chart. For new traders, the constant ups and downs of traditional charts can be overwhelming. Heikin Ashi smooths out that volatility, allowing you to make more confident decisions based on larger trends.
How Heikin Ashi Candles Are Calculated
Unlike standard candlesticks that plot actual Open, High, Low, and Close prices, Heikin Ashi uses a formula that averages price data, creating a smoothed appearance.
Heikin Ashi Candle Formula:
- Close = (Open + High + Low + Close) / 4
- Open = (Previous Heikin Ashi Open + Previous Heikin Ashi Close) / 2
- High = Max(High, Heikin Ashi Open, Heikin Ashi Close)
- Low = Min(Low, Heikin Ashi Open, Heikin Ashi Close)
Highlight: This smoothing effect makes it easier to spot trends and reduce false signals.
These formulas ensure that each candle takes into account not just current price action but also previous price behavior, which makes Heikin Ashi a more reliable tool for trend identification.
Benefits of Using Heikin Ashi in Trading
Traders use Heikin Ashi candles to gain a better perspective of market sentiment. Here are the top benefits:
- Smoother charts: Trends appear cleaner and more defined.
- Fewer false signals: Helps reduce the impact of random price spikes.
- Better trend following: Traders can stay in trades longer by avoiding early exits.
- Clearer reversal points: Doji-like candles often signal trend exhaustion.
- Improved decision-making: Less noise = more clarity.
Highlight: Heikin Ashi helps traders “ride the trend” with more confidence.
If you’re a beginner who struggles with emotional trading or early exits, the smoother transitions of Heikin Ashi can provide the structure and discipline needed for improved consistency.
Heikin Ashi vs Traditional Candlestick Charts
While both chart types serve technical analysis, Heikin Ashi and traditional candlesticks differ in purpose and clarity.
| Feature | Heikin Ashi | Traditional Candlestick |
| Calculation | Uses averaged prices | Uses actual OHLC prices |
| Appearance | Smooth, flowing trends | More volatile, noisy |
| Use Case | Trend-following, filtering noise | Real-time price reactions, precise entry/exit |
Important: Use traditional candlesticks for detailed price action and Heikin Ashi for clearer trend analysis.
For example, a trader using candlesticks might see five choppy candles that seem undecided, while a Heikin Ashi chart shows a single smooth bullish candle—clearly conveying market sentiment.
How to Read Heikin Ashi Candles
Reading Heikin Ashi candles is all about interpreting the momentum of price movement.
Bullish Signals:
- Green candles (no lower wick): Strong uptrend
- Consecutive green candles: Sustained buying pressure
Bearish Signals:
- Red candles (no upper wick): Strong downtrend
- Consecutive red candles: Sustained selling pressure
Neutral / Reversal Signals:
- Small-bodied candles or doji-like shapes: Possible reversal or consolidation
Highlight: Reading Heikin Ashi is all about understanding the dominance of bulls or bears.
This makes Heikin Ashi a strong visual tool, especially when trying to ride trends or spot when a market is about to change direction.
Heikin Ashi Trading Strategies
Here are some practical ways to trade using Heikin Ashi candles:
1. Trend-Following Strategy
- Identify a series of consecutive green/red candles.
- Confirm with a moving average (e.g., 50 EMA).
- Stay in the trade until a candle changes color or shows reversal signs.
2. Reversal Strategy
- Watch for doji-like candles after a strong trend.
- Confirm reversal with RSI divergence or MACD crossover.
3. Scalping Strategy
- Use Heikin Ashi on lower timeframes (1–5 mins).
- Combine with Bollinger Bands or VWAP.
4. Breakout Confirmation Strategy
- Use Heikin Ashi candles to confirm breakouts from consolidation zones.
- Enter trade on second confirming candle after the breakout.
Pro Tip: Always combine Heikin Ashi with volume or another indicator for confirmation.
The key to success is patience and confirmation—Heikin Ashi isn’t meant to be used alone but can drastically improve your timing and clarity when combined with other tools.
Tools and Platforms That Support Heikin Ashi
Most major trading platforms now support Heikin Ashi candles. Here’s how to activate them:
- TradingView: Select “Heikin Ashi” from the chart type dropdown.
- MetaTrader 4/5 (MT4/5): Add custom scripts or use built-in indicators.
- ThinkorSwim, NinjaTrader, cTrader: Built-in support available.
- Binance, Bybit, KuCoin: Crypto platforms also offer Heikin Ashi views.
Note: Check if your broker provides Heikin Ashi natively or through plugins.
Common Mistakes to Avoid with Heikin Ashi
1. Mistaking Heikin Ashi for real-time price:
Heikin Ashi candles are lagging indicators due to their averaging nature.
2. Using them alone:
Heikin Ashi should not replace your full trading system. Use in combination with support/resistance, volume, or indicators.
3. Overtrading based on single candles:
Wait for confirmation before entering trades based on candle changes.
4. Applying same strategies blindly:
What works on a 4H chart may not work on a 5-min chart. Always test.
Highlight: Heikin Ashi is best used for context, not precision timing.
Avoiding these pitfalls will drastically improve your use of this powerful tool.
Final Thoughts: Should You Use Heikin Ashi?
Heikin Ashi candles are a fantastic tool for traders who want to:
- Visualize trends more clearly
- Reduce noise and false signals
- Stay in trades longer and exit more confidently
However, they are not a complete solution. Use Heikin Ashi as part of a broader trading plan that includes proper risk management and other technical/fundamental tools.
Highlight: If you’re just starting in forex or crypto trading, Heikin Ashi offers a great way to simplify your chart analysis.
With practice, you’ll gain the ability to combine Heikin Ashi with tools like RSI or support/resistance for an edge in your trading decisions.
FAQs about Heikin Ashi Candles
Are Heikin Ashi candles good for beginners?
Yes. They help reduce chart noise and make it easier to identify trends.
Can Heikin Ashi be used for all asset classes?
Yes, you can use them in forex, crypto, stocks, and commodities.
What is the best timeframe for Heikin Ashi?
There’s no universal answer, but many traders use it on 1H, 4H, or Daily charts for trend trading. Scalpers may prefer 1- to 5-minute charts.
Do Heikin Ashi candles repaint?
No. Once the candle closes, it does not change.
How do I combine Heikin Ashi with indicators?
Use it with RSI, MACD, EMA, and even Fibonacci retracements to validate trends or reversals.
