Fondex cTrader Heikin Ashi - Everything you should know!

27 December 2022

    What are Heikin Ashi Candles

    As you already know, Fondex cTrader is a very powerful trading platform! One of the great features it offers is the option to see the price movement using Heikin Ashi candles. You might be wondering what Heikin Ashi candles are, therefore in this article, we will explain what they are and how they are used in trading. The words “Heikin Ashi” are Japanese words and they mean “average bar”. There is a specific formula used to calculate a Heikin Ashi candle and Heikin Ashi charts are used mostly for trend identification.


    Heikin Ashi charts are time-based and they look similar to traditional candlesticks, however their Open, High, Low and Close (OHLC) values are calculated using formulas, therefore the outcome is slightly different. Below you can find the formulas used to calculate the Heikin Ashi OHLC values.


    Heikin Ash Close = (Open + High + Low + Close)/4. 


    Heikin Ashi Open = (Open of the previous bar + Close of the previous bar)/2.


    Heikin Ashi High = the maximum value from the High, Open, or Close of the current period.


    Heikin Ashi Low = the minimum value from the Low, Open, or Close of the current period.


    After the above are calculated, the Heikin Ashi candle is printed on the chart. A Heikin Ashi chart in cTrader looks like the one below




    As you can see, candles overlap each other and this is a result of the calculation used to construct these candles.

    Viewing Heikin Ashi Charts on Fondex cTrader 

    It is pretty straightforward to view Heikin Ashi charts on cTrader. You just need to follow the steps below



    As soon as you click on a Heikin Ashi timeframe, your chart will change to a Heikin Ashi chart



    How To Read the Heikin Ashi Charts

    As mentioned above, Heikin Ashi charts are used to identify trends. Heikin Ashi candles help reading the trend direction, where a trend is building strong and where the trend seems to slow down and stop. Here are some popular patterns you can identify in Heikin Ashi charts that provide useful information regarding the current market state.

    Green Candles with No Lower Shadows

    When a series of green candles without a lower shadow is formed, then this is a clear indication that we are in a strong uptrend. Maybe it’s time to enter a buy position.

    Red Candles with No Upper Shadows

    When a series of red candles without an upper shadow is formed, then the market is strongly bearish. Maybe sell too?



    Candles with Wicks on Both Sides

    When candles with wicks on both sides start to appear, then this is an indication that the previous trend might be coming to an end. Maybe it is a good time to reconsider your market positioning.



    Concluding, Heikin Ashi candlesticks have been designed in a way to assist traders reading the trends. Compared to traditional candlesticks, they tend to smooth out the trends, hiding possible fake outs, and allowing traders to stay focused on the actual price movement and its direction. Nevertheless Heikin Ashi charts, as any other technical analysis tool, always needs to be used in context. An out of context interpretation of the Heikin Ashi chart patterns can generate a lot of false signals that could lead to substantial losses. Therefore, when using the Heikin Ashi charts, always consider the market fundamentals that currently move the market and combine the signals with other confirmation signals, like trend indicators, support/resistance levels and the relevant price action taking place on the chart.



    The content provided in this material and/or any other material that this content is referred to, whether it comes from a third party or not, is for information purposes only and shall not be considered as a recommendation and/or investment advice and/or investment research and/or suggestions for performing any actions with financial products or instruments, or to participate in any particular trading strategy and cannot guarantee any profits. Past performance does not constitute a reliable indicator of future results. Fondex does not represent that the material provided here is accurate, current, or complete and therefore shouldn't be relied upon as such. This material does not take into account the reader's financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Fondex, no reproduction or redistribution of the information provided herein is permitted.

#cTrader#candlesticks#Heikin Ashi#Candlesticks

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