Heikin Ashi ("average bar" in Japanese) builds each candle from averages instead of raw prices. The result: smoother charts where trends show up as long runs of one colour.
Noisy: lots of colour flips
Smoothed: trend in long colour runs
How they're built
- HA close = (open + high + low + close) ÷ 4
- HA open = (previous HA open + previous HA close) ÷ 2
- HA high/low = the extremes of the real high/low and HA open/close
Reading them
- Green candles with no lower wick: strong uptrend.
- Red candles with no upper wick: strong downtrend.
- Small bodies with wicks on both sides: possible turn.
Rookie mistake
Placing orders at Heikin Ashi prices. They're averages, not real prices. Always check the real chart for entries and stops.
Wick says
Heikin Ashi is the noise-cancelling headphones of charting.
Key takeaways
- HA candles are averaged, so they're smoother.
- Long colour runs = trend; mixed small candles = indecision.
- Use them to stay in trends, not for exact prices.