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Binary Options Trading with Heikin-Ashi Candles - Instructions 2020

Binary options trading with Heikin-Ashi candles 2020: how does it work? The Heikin-Ashi chart explains Now trade on the chart.

Trading is a competition for the best price, the best set-up, the best profit. Because in the end there is a winner and a loser. Ok, of course it's not that exact, there is not just one winner or loser, but several on both sides. Given this known fact, it is surprising that many traders are very homogeneous in their trading. It is all the more difficult to gain an edge or an advantage over others.

The trader Dan Valcu has therefore optimized the candlestick chart and developed the Heikin-Ashi chart from it. Basically, this is a smoothed type of candlestick chart. This means that trends, particularly in low-turnover markets, are to be better represented and gaps in the course of the price are excluded.

The calculation of the Heikin-Ashi candle

Like the candlestick, the Heikin-Ashi candle also consists of an opening - and closing price (open, close) and a low and high (high, low). The calculation of the Heikin-Ashi candle works as follows:

  1. Calculation of the HA-Open = (HA-Open from the previous day) - (HA-Close from the previous day) / 2
  2. calculation des HA-Close = (Open + High + Low + Close) / 4
  3. Calculation of the HA-High = maximum value of HA-High, HA-Open and HA-Close
  4. Calculation of the HA -Low = minimum value of HA-Low, HA-Open and HA-Close

Based on this calculation method, the display of the chart is smoothed, as the lower picture of the currency pair NZD / USD clearly shows.

As you can see, the trends are much more pronounced. Nevertheless, it is striking that the lows and highs of a candle are very far apart, which could initially make short-term trading more difficult. In the next post we will nevertheless try to build a strategy with the Heikin-Ashi candles in the short-term area.

Binary Options Trading with Heikin-Ashi Candles - Instructions 2020

Interpretation of the Heikin-Ashi candles

There are several rules of interpretation for the Heikin-Ashi candles.

  • Blue candles represent upward trends, red candles downward trends.
  • Gaps are no longer displayed.
  • The longer the candle bodies, the trend is even stronger.
  • Small candles indicate a change in trend.
  • Candles with widely spaced wicks represent consolidations (even when changing between blue and red candles).
  • In the upward trend, candles have no lower wick and vice versa.

Furthermore, the following rules of interpretation can be defined:

  1. A normal trend is signaled by increasing candles.
  2. A growing trend is represented by longer candles without shadows.
  3. A weakening trend is represented by diminishing candles with partial shadows.
  4. Consolidation is represented by small candles with alternating upper and lower shadows.
  5. A turnaround becomes represented by a small candle body with a long shadow.

In the lower chart we tried to identify the interpretation rules 1-5. However, we did this on the NZD / USD currency pair. This made one thing stand out: As is so often the case, rules 1-5 can only be classified as general and checked from market to market. In this case, the rules - except rule # 1 - were hardly identified as they were assumed. Stronger trends nevertheless showed a shadow, reversals of trends were not necessarily indicated by small candles. However, this should not prevent you from establishing your own rules of interpretation, which we will do in the next post after a detailed analysis.

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Conclusion - Heikin Ashi as an interesting form of presentation

The Heikin-Ashi The chart, like the candlestick chart, is calculated from the same parameters, so it only represents a different form of presentation. The chart is particularly suitable for low-turnover markets such as individual values. The chart could also show its advantages in long-term trading. However, as so often, a separate interpretation of the rules is necessary for different markets.

It should be noted, meanwhile, that the chart is also suitable for the use of indicators and can demonstrably provide good signals if you use the right ones, That will also be part of the next article on the development of a strategy with the Heikin-Ashi chart.

Until then, traders can try out some of the strategies presented with the broker BD Swiss with little effort.

Binary Options Trading with Heikin-Ashi Candles - Instructions 2020

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