[Heikin-Ashi Trading Strategy]-Steemit Crypto Academy | S4W2 | Homework Post for @reddileep

Greetings prof and to all steemians,

I am happy to make another submission once again this week for this lecture on Heikin-Ashi trading strategy by @reddileep. The lecture was amazing and i personally believe this would go a long way to help me in my trading activities as i would be testing it on the volatility and stock markets.

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1. Defining Heikin-Ashi in my own words

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I would define the heikin-ashi technique as a form of candlesticks similar to but different from the japenese candlestick such that whiles the Japenese candle stick just works with the momentum of the market and representing the open and close of market prices for bears and bulls the heikin-ashi candle-stick technique takes into accound different variables to compute.

That's it incorporates the high, low, start (open) and end (close) of the previous candlestick in addition to two of the period averages. It is better at telling trends and actually make your chart looks nicer more or less a trimmed or cleaned chart.

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2. Differences between Japanese Candlesticks and Heikin-Ashi Chart

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I have decided to summarize this in a simple table to make it easier for readers to appreciate and grasps easily.

Japanese Candlestick	Heikin-Ashi Chart
Candle or bar is obtain from difference of low and high price	Bar is obtain from average in addition 2 point moving averages
Generates a noise chart	Generates a smoother chart
Hides gaps and unnecessary price data	Shows gaps and all price data
Doesn't identify trends	Identifies market trend
Price matching current price of asset	Price doesn't match current price of asset

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3. The Heikin-Ashi Formula

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For the formula we consider the close, the open, the high and the low. Each of these have it's own computation or formula all of which come together to make the technique work. The close is the mean price of the current candlestick, the open is the center of the previous candlestick, the high is the highest price of the highs and low the lowest value of the lows.

Please find below the various formulas for each of the components;

• The close= (open + high + low + close) of current price / 4

• The open= (open of previous price + close of previous price) / 2

• The high = (high of current price, opening of current price, close of current price ) x Max

• The low= Mix x (low of current price, opening of current price, close of current price)

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4. Buying and Selling Opportunities with Heikin-Ashi

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The Heikin-Ashi chart tend to go along with the trend in terms of color which makes it easier riding the trend and spotting a point to leave the market to save your earnings. In an uptrend you can look for a point where there is indecision in the market and when market starts to print bullish candle you enter and ride the trend again same for a bearish market sell.

Basically the indicisive points on the japanese candlesticks this could be representing a price correction which one can use the fibonacci to get back with trend. Another way you can do this is with the help of the 21EMA and 55EMA which i have show in my charts below. Once below the chart we can look for buying opportunities and vice versa for selling opportunities.

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5. Trading with Only Heikin-Ashi?

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Well i believe it is possible to trade with only Heikin-Ashi technique, if one can be patient enough to wait for the trend to establish and join and leave at the signal of reversal one can some level of success although it is important that as a trader you know that not all indicators are 100%.

However to make a stronger signal with an even higher chance of success with market moving in your direction and getting better exit signals to save your profits i would advise you add the 21EMA and the 55EMA to your chart to guide you. I also the addition of fractals and support and resistance lines as seen in my chart previously would add up to your signal and with all signals point in one directions you a powerful confluence trade.

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6. Buying and Selling with Heikin Ashi on my Meta Trader 5 Volatility Indice Market

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6. Conclusion

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Many thanks to @reddileep for an amazing lecture and a great technique. I would certainly be testing this over the next few week and i look forward to learning more from you.