Free article in PDF about Heikin-Ashi published in the IFTA Journal (International Federation of Technical Analysts) by Dan Valcu, CFTe
One thousand traders, one thousand profiles.
But one single element works like glue for all market participants and pushes prices up and down : The continuous quest to identify trends and positions on the correct side of them. What “correct” means is a different story for everyone and depends on the individual profile (time frame, capital and risk management, perception of the external stimuli).
This article introduces and discusses a lesser-known Japanese trend technique, heikin-ashi, that from its beginnings was used to filter out price noise in any time frame. Like many of the Japanese charting techniques, heikin-ashi is a visuel add-on to any trader’s existent decision tools. Since almost everything can be quantified, the technical indicators derived from the original heikin-ashi candle formulas are a step forward towards a more complete and less risky trend technique.
In the end, heikin-ashi becomes a tool that appeals to both sides of the trader’s brain: Right (heikin-ashi original visual charts) and Left (analytical, new heikin-ashi technical indicators).
If the sequence Identification – Analysis – Decision – Execution is high on trader’s priority list then this simple trend technique is an excellent choice to reduce its duration and increase confidence in the decisions taken.
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