Traders often try many strategies, but all of them don’t match up to the expectations. With changing markets, one has to keep trying new ones. Or else making profit Forex trading regularly is difficult.
For most traders, candlesticks are known indicators, but now there is a modified version available. One such is the Heikin Ashi. It helps you make profitable Forex trades. Many traders have been able to extract good profit with it.
This candlestick method is in wide use in Japan. Just like the Ichimoku Charts, Heikin Ashi has seen sudden rise in popularity. However, this is more efficient for making trade FX profitable.
Why it works well for profit FX trading
There are a lot of reasons why traders love using profit Forex trading.
• Firstly, it is much more compact. Making out signals from this is very easy.
• Secondly, its ease of use is unmatched. The charts are easy to understand. This is a major advantage for beginners.
• The charts are much easier to plot. As a result, people use this indicator much more.
To make profit FX trading, one has to predict well. Now, this Japanese indicator is great at identifying and predicting trends. Not only does it identify relative strength of a trend, but it's also good at telling you about price action. It tells you about the main turning points of a trend.
The Heikin Ashi is similar to the moving average in some characters. It smoothens out erratic behaviour of the charts. So you don’t have to think of unnecessary spikes in volatility.
That way you can eliminate risks that may affect your trade.
Normally, while using candlesticks, one tends to look at the individual candles and their lows and highs. However, Heikin Ashi works in a different manner. It considers price per bar and then it averages these prices. As a result, you have a smoother outcome. Considering how volatile currency markets might get, this is a major advantage.
How the signals work?
Now, these are the basic signals users of Heikin Ashi must know to use it.
• Positive candle without wicks – Strong momentum on an uptrend.
• Positive candle with wicks – Strength to support the price action enabling it to go higher.
• Small candle but long wicks – This resembles a Doji formation. A near-term turnaround can be expected.
• Negative candle with wicks – Weak momentum. It supports price action but lower in market.
• Negative candle without wicks – Here momentum to sell is substantial.
These signals and their implications are very useful for a trader using Heikin Ashi. But knowing them will help them make trade Forex profitable. However, it takes time to master this method.
All in all, this candlestick works well. Most have been happy with its use. Of course knowing the signals takes up some time. But once you do get a hang of it, you will find it profitable. Traders are recommended to use it for profit Forex trading. However, before starting off with their real money, you should test it out in a MT4 demo trading account.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.