Improve Your Trading With Heiken Ashi

Looking for a way to improve the profitability of your trading

? Then why not try the heiken ashi method, which is a form of prediction chart originating in Japan. Often the reason why a trader is losing money is because they are not predicting the markets effectively, and with heiken ashi traders can improve their predictions substantially.

There are three states to any market, these are uptrends, downtrends and consolidations. Heiken ashi charts use several calculations in order to predict these as closely as possible. Traders need only have one glance at a heiken ashi chart and they will have a good idea of where the market is headed at that point in time. In this way, a trader will be making much better decisions in regards to their trading.

If you are searching for a method that will give you an edge over other traders then heiken ashi is the way to go. A good thing about Heiken ashi is that it is only recently coming into popularity, so if you begin using these charts now you will have an advantage over other traders who are still using the basic candlestick charts. Heiken ashi portray the relative strength of a trend, so there is a kind of moving average as the formula takes note of important points in price action. Another good thing about these charts is that the candlesticks do not show erratic fluctuations in the markets. This means traders can make much better decisions as they are not being distracted by such jumps.

A good idea for those just beginning to use heiken ashi, would be to use the charts side by side with the traditional candlestick chart in order to carry out a comparative study. This will further enhance the decisions a trader makes, as it will provide a wider view of the market landscape.

The candles in a heiken ashi chart are consecutive, meaning that one candle plays a part in determining the next. This provides a certain flow and accuracy to the chart that you will not get with others. Heiken ashi are said to provide traders with a much smoother result, as they do not reflect the volatility normally portrayed in stock market charts. By excluding this sort of 'noise' a trader can see the clearer picture.

There are four simple parts to the formula for calculating a heiken ashi chart, and these are separated into close, open, high and low. Getting to grips with these formulae will further improve your understanding of the charts. In a way, heiken ashi charts provide a simpler view of the market trends, despite the fact that the way in which they are compiled can be slightly complicated or mathematical. It is often more advantageous to view things in this kind of simplified manner as it allows you to make better judgements.

In essence, if you are seeing the market clearly you are improving your trade substantially as the decisions you make will be far more accurate.

by: Kobe J Brown

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