Heiken Ashi, that sounds strange. It is a variation of the Japanese candlestick strategies. It is also very useful when used as an overall trading forex strategy. What is the difference between the other Japanese candlestick strategies and the forex Heiken Ashi strategy? The answers are
1. It filters out the noise that is common with other Japanese candlestick strategies.
2. They are good for identifying the trend of the market in a way that is much easier than other plotting methods
WHAT IS A MARKET NOISE AND WHY IS IT IMPORTANT TO REMOVE IT?
The forex market trends in different ways. Some are very visible on the charts while some others are not. A trader that trades better when the forex market is trending should develop what it takes to know when these trends are under cover. Sometimes, the market maybe trending, but a trader cannot tell because some price data is all over the place distorting the picture of the underlying trend. It is important to remove these noises so one can clearly trade the market right.
Noise removal helps traders to avoid false signals which can lead to wrong decisions and losses. In addition to the Heiken Ashi strategy used in noise removal, other techniques that can be used for the same purpose are
- Kagi chart
- Renko chart
- Isolation of trend direction
Like was mentioned earlier, the Heiken Ashi forex strategy is more precise and thorough with the removal of noise from a trade unlike many other techniques, especially those of them that are based on Japanese candlesticks.
USING THE HEIKEN ASHI FOR TREND RECOGNITION:
Knowing the direction of a trend increases a trader’s likelihood to be successful in a trade. Like was mentioned earlier, some trend are more amplified that the others. If the trend is so obvious, a trader may not need trade aides to help with trend identification. But when the trend is not readily obvious, then there is need to apply the proper tools to identify it and help the trader trade right.
It may not readily come to mind that mastering a trend is the first thing a trader needs to do before trying to develop a strategy with which to trade the forex market. The forex market is always moving in one direction or the other. Without these movements in price, it is impossible to make any transactions or profits. It is what determines when to open a position and when to close it out.
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