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EURUSD & Heiken Ashi

  • #1
  • First Post: Edited Mar 10, 2011 1:51am Feb 26, 2011 8:27am | Edited Mar 10, 2011 1:51am
Hi traders, tracers, trailers and trainees!

I am not going to waste your time so I will go straight to it.

Heiken Ashi (HA) is probably the best indicator after pure price action (PA). I am saying this because I know many have a problem with PA because you can blame yourself time after time for not paying enough attention to the movements.

With HA you don't really have this luxury its either red or blue and you go accordingly.

The key here is to know when you shouldn't trade and if there is no waves don't surf, it just wont work.

Below you will see a chart with horrible spread because it is Saturday.
The day is 24th of february..
And below that you will see the news on that day, nothing special. Just a normal day in paradise.

What do you guys think, any inputs? Anyone else trading M30 HA?
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  • #2
  • Feb 26, 2011 5:49pm Feb 26, 2011 5:49pm
Yes, I use HA candles on some charts as part of confirmation of other analysis. Try this......chuck a moving average on your chart as per the pic below. If the candles are red AND below the MA.....go short. If the candles are white AND above the MA....go long.
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Doing what you like is Freedom. Liking what you do is Happiness.
  • #3
  • Feb 26, 2011 6:09pm Feb 26, 2011 6:09pm
Quoting realjumper
Yes, I use HA candles on some charts as part of confirmation of other analysis. Try this......chuck a moving average on your chart as per the pic below. If the candles are red AND below the MA.....go short. If the candles are white AND above the MA....go long.
Hi realjumper. I haven't played around with H.A much, do you just use the standard one in MT4 or do you use a special setting?
Cheers
FF journal: Peaks and Troffs
  • #4
  • Feb 26, 2011 6:13pm Feb 26, 2011 6:13pm
Quoting bogus
Hi realjumper. I haven't played around with H.A much, do you just use the standard one in MT4 or do you use a special setting?
Cheers
Just the bog standard MT4 HA candles.
Doing what you like is Freedom. Liking what you do is Happiness.
  • #5
  • Feb 26, 2011 6:14pm Feb 26, 2011 6:14pm
Quoting realjumper
Just the bog standard MT4 HA candles.
Ta.
FF journal: Peaks and Troffs
  • #6
  • Feb 26, 2011 6:16pm Feb 26, 2011 6:16pm
Quoting bogus
Ta.
No worries.....the MA setting I use is borrowed from another very good thread here
Doing what you like is Freedom. Liking what you do is Happiness.
  • #7
  • Feb 26, 2011 7:54pm Feb 26, 2011 7:54pm
Quoting realjumper
Yes, I use HA candles on some charts as part of confirmation of other analysis. Try this......chuck a moving average on your chart as per the pic below. If the candles are red AND below the MA.....go short. If the candles are white AND above the MA....go long.
Hi RJ and thanks for dropping in

I have looked at Heiken Ashi with Moving Average but decided to use price action instead. But when you think about it, its quite similar to a MA.

The thing I like with Price action is that you can "easily" see if there is enough players out there...

What do you guys think?
Chart should explain it, tell me if it doesn't...
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  • #8
  • Feb 26, 2011 7:59pm Feb 26, 2011 7:59pm
Here is some other stuff I am playing around with.

This is a result from a consistent player....

What do you guys think?
Im thinking Risk, Reward, drawdown, pips, spread, crosses traded, how often he trades and so forth...
If you ask me this is gold.

Share your thoughts
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  • #9
  • Feb 26, 2011 8:16pm Feb 26, 2011 8:16pm
I just want to show another traders results, I find it interesting cause he has 94% winners... But he allows for a good DD on each trade, he takes a loss when it reaches 100 bucks in negative... thereabout at least...
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  • #10
  • Edited 11:40pm Feb 26, 2011 11:25pm | Edited 11:40pm
Quoting Larseg
Hi RJ and thanks for dropping in

I have looked at Heiken Ashi with Moving Average but decided to use price action instead. But when you think about it, its quite similar to a MA.

The thing I like with Price action is that you can "easily" see if there is enough players out there...

What do you guys think?
Chart should explain it, tell me if it doesn't...
As you say, there are similarities.....doesn't do any harm to have both confirming the same thing though.....for instance......if the candle is white, AND above the MA AND is big body candle....then hell....let's enter. If however, the candle is white AND above the MA BUT the candle is a little pissy-ass candle....go make some coffee!!!

Another way is to throw a stochastic on the chart to see whether the likelyhood of a upswing is on the cards. There are many ways. For me, using HA candles, having the MA is is just another way of confirming what the candles are saying

I like the HA candles because, as you have said already, everything is pretty clear. Apart from the MA, about the only other I like to see is pivots. I don't want to get bogged down in ever more complex technical anaysis as you see many traders attempting, and usually failing dismally, and not even knowing why.

At the end of the day, the pa will go up or down (ok...maybe sideways for a period). That's it.....up or down, black or white, left or right, heads or tails. No need to make something so basic, ever more complex and difficult to understand. Keeping it simple is the key. HA and MA with maybe a glance at the daily pivots is about as complex as it needs to be.....imho.

I am very willing to learn more about HA candles as I think this is a pretty basic way to trade which should be profitable with minimal headaches. Even if you lose 6 out of 10 trades, which is not likely if you follow the basics of HA analysis......but even if you did, you'd still come out with a modest profit, break even or at worst, a tiny loss.

Edit: The above paragraph assumes the trader is using a sensible stop loss and r/w management!
Doing what you like is Freedom. Liking what you do is Happiness.
  • #11
  • Feb 26, 2011 11:47pm Feb 26, 2011 11:47pm
Quoting Larseg
I just want to show another traders results, I find it interesting cause he has 94% winners... But he allows for a good DD on each trade, he takes a loss when it reaches 100 bucks in negative... thereabout at least...
Yeah that it interesting, but I wouldn't allow such huge drawdowns for such a tiny profit. It seems silly to me. The entry was badly timed, which we all do from time to time, but I will exit with a small loss and enter at a better time, rather than hang on with such a big drawdown. Taking it to an extreme, you could have 100% winners if you could stand an unlimited drawdown......but to exit with a small loss and either reverse the trade or wait for a better entry will be a hell of a lot more profitable.
Doing what you like is Freedom. Liking what you do is Happiness.
  • #12
  • Feb 27, 2011 1:24am Feb 27, 2011 1:24am
Quoting realjumper
As you say, there are similarities.....doesn't do any harm to have both confirming the same thing though.....for instance......if the candle is white, AND above the MA AND is big body candle....then hell....let's enter. If however, the candle is white AND above the MA BUT the candle is a little pissy-ass candle....go make some coffee!!!

Another way is to throw a stochastic on the chart to see whether the likelyhood of a upswing is on the cards. There are many ways. For me, using HA candles, having the MA is is just another way of confirming...
Rewritten my first rule there and adapted your MA exponential 5, it filtered out 8 bad trades on the last 100 compared to mine, but also lost 3 winners but better to be "safe". Going to be interesting testing it out tomorrow.

I have 5 different systems going now so have to scrap one after next week...

I like HA because it is more dynamic and doesn't really care about the price if you know what I mean

using this technique together with enough momentum and I cant see how I could fail

I am interested in tweaking the lot sizes here also, on the last 100 trades I had 2x4 consecutive losses. With risk reward between 1:2 and 1:4.

I will accept 5 losses before I reset. In other words when I have somewhere between 12-18 wins I can cash out or re-calculate (increase) lot sizes...

Will be putting on 1-2 trades a day, so after a week I should have 5-7% profit after the spread.

Sounds reasonable?
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  • #13
  • Feb 27, 2011 7:17am Feb 27, 2011 7:17am
Quoting Larseg
Hi traders, tracers, trailers and trainees!

I am not going to waste your time so I will go straight to it.

Heiken Ashi (HA) is probably the best indicator after pure price action (PA). I am saying this because I know many have a problem with PA because you can blame yourself time after time for not paying enough attention to the movements.

With HA you don't really have this luxury ...
Cold Sunday here setting charts up for next week and very bored so went to FF and I read your new thread....

You seem like a honest small trader and I hope you don't get me wrong on this but let me give you my 2 cents because IMHO I think you are wasting your time with HA (Heiken Ashi) at least in the way you are trying to use it.

I know is very tempting to have less "noise" in your charts so using something that makes clear red/green buy/sell without too much effort is something we all would want in one way or another but static HA analysis with a MA IS NOT the answer.

As you know HA is repainting (the close is the avg of OHLC or something like that) so in your chart the 2 "valid" entries will be in reality 15 or even 30 ticks above the apparent perfect HA close meaning all "setups" in your chart are actually losers (and without mentioned a poor r:r...) if you don't scalp quick profits 5 or max 10 ticks or close position before you have a bar changing color to the other side.

Even that apparent massive green rally at the end of your chart from 1.374x to 1.380x is untradable if you trade only HA. The actual (real) close of that first 30m green bar is probably around 1.376x (judging from the the large tail at the top) and if you wait to the first red bar to exit is probably BE at best (judging form the tail)....so even a massive rally gives you barely some ticks. I know sometimes you will have trend that will give you 100s but not after the other xxxx untradable lossing signals....

At the end you will end up, having the same problems like any other trading option, trying to recognize direction, trying to anticipate entries and exit, adding extra indicators, filters, pain, fear, confusion, start again ....

Look any tool is valid for trading and I am not implying that HA is good or bad or you have to discard them or not. The only thing I am convinced is the way you are presenting them in your thread is not a good one IMO....

In any case if you insist to use HA candles (i wouldn't recommend unless you have a less canned approach on HA) why don't you think outside of the box and play a close above/below prev wick high/low for entry instead of a change in color only ....or even a close above/below that last HA wick using normal candles.... I don't know (and I am not interested at all in testing indicator systems) if that will work but at least you will use HA in one chart but will erase the repainting problem for entries/exits in another.

Not everything that glides is gold, and HA used in this sense make a textbook example of this.

In any case, just my 2 cents, best of luck in your trading next week.

sisse
Pending conversations? PM for a chat...I am mainly in OTM now
  • #14
  • Feb 27, 2011 12:28pm Feb 27, 2011 12:28pm
Quoting sisse
Cold Sunday here setting charts up for next week and very bored so went to FF and I read your new thread....

You seem like a honest small trader and I hope you don't get me wrong...
I agree with every word of that

Saw this thread this morning and thought about responding, but didn't as it would have to be a lengthy one. But thankfully somebody else took the trouble.

Just to expand on some of sisse's observations, the open of the HA candle is EMA3 of (O+H+L+C)/4 and the close of the candle is simply the close value of (O+H+L+C)/4.

So what you are essentially trading is an EMA1/EMA3 crossover, perhaps modified with the EMA5 of the candle pivot.

Try back-testing that and tell me if you find consistent profitability

And by trading M30 you are filtering out so much information that even good opportunities become untradeable.

Instead you could move the same system to M5, i.e. trading EMA6/EMA18 crossovers in the direction of EMA30. Then you are giving yourself a chance, but you still need to figure out your setups and entry technique to avoid being chopped by whipsaws.

Hope that helps. If not, feel free to disagree.
  • #15
  • Feb 27, 2011 2:17pm Feb 27, 2011 2:17pm
Quoting medici
I agree with every word of that
Well, I don't agree with much of that!!

Look, HA candles vs 'normal' candles is like asking a Windoze user to get right into Linux. The Windoze user will find all the faults he can, but the reality is he is uncomfortable with using a different operating system. He didn't actually find lots and lot's of faults with the system, he found lots and lots of differences, and he wasn't comfortable with the differences. He was 'out of his comfort zone'.....he was in unfamiliar territory and as is perfectly human, he resists the change.

If that same person had have been brought up on Linux and never seen the Windoze operating system, the same would be true.

Take a look at my chart further up this page and consider this: Take the trade only when the first candle opens clear of the moving average (and not before). Using nothing else, there are several trades available on that chart. For sure, some of them would have been small losers, but there are 2 medium wins there and two big wins. Now, if you add the stochastic to that chart, it is easy to filter out most of the losers, so that in actual fact you would never have entered the trade to start with!

Using HA candles with the MA and stochastic is good......adding the TDI indi as in eelfranz's 5 method on this thread here, makes it a system with a pretty high success rate. I have demoed this method for the past month, and while I have yet to collate the results, as the month finishes tonight, I can say that it is very impressive with it's win/loss rate, and equally impressive with it's small pips lost per trade.

HA candles aren't the holy grail, any more than trendlines, fibs, murray maths, harmonic patterns etc etc etc are, but if used in a simple basic system, they can be hugely profitable without much extra noise on the charts.

HA candles are different, not wrong or bad, or deceptive or anything normal candles aren't. They're just different.

I believe that Larseg is trying to broaden his knowledge/horizen by investigating HA candles, and that should be applauded. If he decides they are no good for him, that's fine. Pouring cold water on the investigation this early though is not such a good idea.

Oh, and Linux rocks by the way!!
Doing what you like is Freedom. Liking what you do is Happiness.
  • #16
  • Feb 27, 2011 2:33pm Feb 27, 2011 2:33pm
Quoting realjumper
HA candles aren't the holy grail, any more than trendlines, fibs, murray maths, harmonic patterns etc etc etc are, but if used in a simple basic system, they can be hugely profitable without much extra noise on the charts.

HA candles are different, not wrong or bad, or deceptive or anything normal candles aren't. They're just different.

I believe that Larseg is trying to broaden his knowledge/horizen by investigating HA candles, and that should be applauded. If he decides they are no good for him, that's fine. Pouring cold water on the investigation...
Ah, some healthy debate! But I think I agree with what you are saying too

Still, these words from sisse's post are really true:


At the end you will end up, having the same problems like any other trading option, trying to recognize direction, trying to anticipate entries and exit, adding extra indicators, filters, pain, fear, confusion, start again ....

Contrary to you I believe it's a good thing to take larseg out of unfounded expectations. HA candles is just another indicator, and if you are looking for the indicators/system that'll save you from the real work, then some cold water might be a healthy wake-up call.

And the point of my post was to point out what HA candles really are.

Totally agree about Linux too, if only it worked out of the box...
  • #17
  • Feb 27, 2011 2:47pm Feb 27, 2011 2:47pm
Quoting medici
Contrary to you I believe it's a good thing to take larseg out of unfounded expectations. HA candles is just another indicator, and if you are looking for the indicators/system that'll save you from the real work, then some cold water might be a healthy wake-up call.

And the point of my post was to point out what HA candles really are.

Totally agree about Linux too, if only it worked out of the box...
The expectation is only unfounded after it has been investigated, and not before! HA candles is not just another indicator.....it is as much of an indicator as is normal candles....as I said, not better or worse, just different.

Yep, Linux has it's faults.....I was going to list them but I need to go and find the latest 'service pack/patch' for Windoze first!
Doing what you like is Freedom. Liking what you do is Happiness.
  • #18
  • Feb 28, 2011 12:07am Feb 28, 2011 12:07am
Quoting sisse
Cold Sunday here setting charts up for next week and very bored so went to FF and I read your new thread....

You seem like a honest small trader and I hope you don't get me wrong...
Hi Sisse and thanks for sharing your thoughts, I understand that the price can be a bit way off with HA so I have taken out my 5M chart.

I will use technicals looking for Supply and Demand etc.. It has worked before so why not now

However, waiting for a trade....

Chart 1 . Break of 1.3750 will probably tell us that we had a suckers rally..
Chart 2. HA 5M should confirm this with red sticks
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  • #19
  • Feb 28, 2011 12:41am Feb 28, 2011 12:41am
Quoting Larseg
Hi Sisse and thanks for sharing your thoughts, I understand that the price can be a bit way off with HA so I have taken out my 5M chart.

I will use technicals looking for Supply and Demand etc.. It has worked before so why not now

However, waiting for a trade....

Chart 1 . Break of 1.3750 will probably tell us that we had a suckers rally..
Chart 2. HA 5M should confirm this with red sticks
Looks like there is a reversal going as the price is falling out of uppward trendline, next candle red = short
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  • #20
  • Feb 28, 2011 12:45am Feb 28, 2011 12:45am
Quoting Larseg
Looks like there is a reversal going as the price is falling out of uppward trendline, next candle = short
Nice, this is exactly why I like HA, saved me cash for not taking the trade before close of new red candle...

Still waiting, if pullback is above broken trend line (first red candles then blue over broken trend line) = Bulltime
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