Use Heikin-Ashi candles - trade binary options in 2020

Heikin-Ashi Candles & Binary Options 2020: Indicator for Trading Strategies Guide for Options Traders Use Heikin-Ashi Candles now.

In the last post we introduced the Heikin-Ashi candles. As a reminder: This is a different form of representation of the candlesticks. This should smooth the course of the course and thus offer a better view of existing trends. Particularly weak sales figures can thus be better represented on the Heikin-Ashi chart by closing gaps. Here are the general rules of interpretation:

  1. A normal trend is signaled by increasing candles.
  2. A growing trend is indicated by longer candles without shadows.
  3. A weakening trend is represented by smaller candles with partial shadows.
  4. A consolidation is represented by small candles with alternating upper and lower shadows.
  5. A trend reversal is represented by a small candle body with long ones Shown shadows.

However, we have also found that these rules do not always apply. More specifically - and based on the NZD / USD exchange rate under consideration - we have only identified Rule # 1 as a reliable signal. The next step for us is therefore to set up our own rules. Let's look at the gold price chart. Since we want to trade on a short-term basis, we look at the charts starting with the day candles and then down to identify a trend.

The daily chart shows that the gold price has been in an upward trend since the beginning of August, This is supported by both the formation of three higher lows and the rising RSI indicator. Nevertheless, it must also be noted that the trend currently appears to be weakening, but this is not important for our analysis. We want to find out how we could have traded the trend using the Heikin Ashi candles.

The 4-hour chart for the gold price shows the moment when the price turned up in August. According to the general rules of interpretation, a growing trend should be shown by longer candles without shadows. We see this in at least the first part of the trend in none of the candles. That means the price was quite volatile within the span of four hours.

However, the consolidation that followed was clearly recognizable: first increasing red candles and then a change between small red and blue candles, The break in the upward consolidation represented a stronger trend than the first. You can see this from the shorter and shorter shadows.

After this analysis, we realize that the general rules of interpretation represent the ideal case, but this is as good as is never there. Therefore we can define the rule for us:

  • A trend is dynamic when the bodies are / become longer than the shadows.

Let's look at the first trend According to our interpretation rule, he does not look really dynamic. The second trend is more to the point. We can therefore define the following additional rules for a strategy:

  1. A trend reversal must already have been established.
  2. A consolidation should also take place.
  3. The consolidation should in the direction of the trend.
  4. The candles of the following trend should have a certain dynamic.

Trading with Heikin-Ashi candles - example

First of all we identify a further turnaround. This should be followed by consolidation before we even think about getting started. As you can see, this pattern is common and therefore not uncommon.

It is important to pay attention to how the trend continues. In this case, there is a certain dynamic after the break in consolidation, but the candles are also becoming shorter overall, which suggests further consolidation. Only after the second consolidation does the trend become more dynamic, which suggests that the trend will continue for a while.

Another short consolidation follows in the trend, but the trend then follows. Only further up the Heikin-Ashi candles again show a mixed picture. The RSI indicator is also slowly falling now.

If we now look at the 15-minute chart, the dynamics of a trend become even clearer.

The same rules can also be used here to benefit from dynamic trends. It should be emphasized particularly positively that some indicators can also give clear signals in the short-term area.

Use Heikin-Ashi candles - trade binary options in 2020

Conclusion - Heikin-Ashi candles are suitable for experienced traders

The Heikin-Ashi candles are another form of representation of the candlesticks. However, their interpretation is not necessarily easier. This is where a trader's preferences are asked. If the trader wants to exclude gaps, he could use the Heikin-Ashi candles. However, everyone has to define their own interpretations for this form of representation, since the general rules represent the ideal case, which, however, only rarely occurs.

Use Heikin-Ashi candles - trade binary options in 2020

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