Heikin Ashi vs Candles: Which Is Best?

So you want to know the difference between a Heikin Ashi vs candles chart?

Well, let’s find out.

I’m sure you’ll agree with me when I say:

Heikin Ashi is a simple way to go if you want to trade technical analysis.

And I’m going to show you what it is, why it’s used, and exactly how you can easily add it to your trading analysis.

Let’s get started.

What is Heikin Ashi?

Heikin Ashi means average bar in Japanese and is used to cancel out the market noise to determine trends in assets.

The Heikin-Ashi candles are based on the assumption that the best way to trade securities is to follow the market trend. The theory behind the technique is that security will go up or down in price relative to the overall market average.

Developed by Munehisa Homma, the goal behind these candlestick variations was to incorporate an average of the previous price action.

This led to a modified formula based on two-period averages, which in turn, gives you a smoother series of candlesticks which makes spotting trends and reversals clearer than traditional candlesticks.

The formula itself is quite complicated, but I’ve summarised it for you below:

The HA-Open is the average of the previous Heikin open and close price.

The HA-Close is the average of the open, high, low and close prices of the current period.

The HA-High is the same as a normal high that is generated on a candlestick – the highest point during the period.

The HA-Low is also generated the same at the lowest point during the trading period.

Let’s take a look at what they look like:

Heikin ashi vs candles chart

As you can see, the bodies tend to be longer than you’d expect with traditional candlesticks.

But you can see that the chart is “smoother” and less choppy in comparison.

Whereas in comparison, here is the same chart but using Japanese candlesticks instead:

Heikin ashi vs candles chart example

As you can see from the image above, the traditional candlesticks are quite sporadic in comparison to the Heikin Ashi candles.

How To Read Heikin Ashi Candles

Reading Hekin Ashi candles is no different to how you would interpret normal candlestick patterns.

  • If the candle is bullish, this is when the closing price is higher than the opening price.
  • If the candle is bearish, this is when the closing price is lower than the opening price.
  • The top of the upper wick is the highest price for the trading session
  • The bottom of the lower wick is the lowest price for the trading session
  • The body is the difference between the open and closing price during the trading session

However, some of the candlestick formations you’ve come to love appear less often.

This is because a Heikin Ashi candlestick absorbs more of the price action and smooths it out, so seeing some candlestick patterns become a rarity.

Instead, you’ll see more indecision candlesticks such as the Doji family.

This is actually a good sign when reading the Heikin Ashi candlesticks because it shows that the trend is slowing down and potentially reversing.

Is Heikin Ashi Reliable?

Everything in forex is speculative.

There is nothing that will give you a 100% guaranteed signal to generate a profitable outcome.

You can look at the fact that these candlesticks have been around for decades and used by thousands of traders across the world.

They are superior and more reliable in finding trends, but it doesn’t give you a full picture.

Personally, traditional candlesticks are better in my opinion due to their versatility and the that you can read what every trading session has done, without it being averaged out on the chart.

I prefer it this way.

This doesn’t dispute whether or not is Heikin Ashi reliable, it is.

It’s just down to preference.

Is Heikin Ashi Good For Day Trading?

All of the technical indicators and candlesticks are derived from price, so time isn’t a factor as such.

Therefore, is Heikin Ashi good for day trading? Yes.

It can be used to greatly smooth out the intraday trends that are generated frequently.

Which is one advantage it has over traditional Japanese candlesticks.

The lower the time frame, the less price action data is accumulated per candlestick, therefore the weaker the signals are (in theory).

Whereas on higher time frames there is more trading action that happens, thus tend to be stronger signals.

1 hours worth of trading action data is far stronger than 1 minute, right?

The key is, with everything in forex trading, to focus on what works for you.

If you trade using Heikin Ashi and find it doesn’t work for you, then don’t use it.

But if it works for you, then go ahead and use it!

Is Heikin Ashi Profitable?

Every method of forex trading that can be used to analyse charts can be profitable.

It’s all about your own analysis and determining whether a trade is good or not.

So is heinkin ashi profitable? Yes, it will be, but it depends on your analysis.

No indicator or setup will make you profitable instantly.

Instead, you have to learn how to use it and see if it actually helps you make your trading decisions easier and more accurate.

You will find thousands of different ways to trade the markets, and each has its own merits.

You should load up a paper trading account with the Hekin Ashi set-up and test it out with your current trading strategy.

If it helps you, great, apply it in the live markets.

If it doesn’t no harm is lost.

What’s the difference between Heikin Ashi vs Candles?

The key difference between the Heikin Ashi vs candles is that there are fewer variations of the Heikin Ashi candlestick patterns.

With traditional Japanese candlesticks, you can have all types of different setups such as engulfing patterns, inside bar, hammer patterns etc.

But these are less relied upon when using the Heikin Ashi charts.

Instead, you get a black and white picture of the markets:

Is it trending?

If not, is it stalling?

That’s it.

They are also less sensitive to larger and faster price fluctuations which allows them to be such great tools for reading the overall trend.

You can make a qualified decision based on these factors, whereas the classic candlesticks require a little bit more analysis.

Conclusion: Heikin Ashi vs Candles: Which Is Best?

It’s time to wrap things up, you’ve learned a lot of great info today about Heikin Ashi vs candles.

Which should you choose?

It’s entirely up to your preference, but if you want a quick glance at market trends then go with using a Heikin Ashi set-up.

At the end of the day, there is no harm in switching between the two… After all, it’s just a simple click away.

After reading this article, you’ll be trading the Heikin Ashi candles like a pro!

Now it’s over to you:

Which part gave you the most value?

Are you going to convert and try out a Heikin Ashi chart set-up?

Let me know on social media.

Also, if you want to improve as a trader, you should check out the related articles below – these will help you with your journey to trading like a pro.

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