Heikin
Ashin Strategy
Step
#1: Identify a strong move to the downside
Step
#2: Wait for the Heiken Ashi bar to change color from bearish (red)
to bullish (green)
Step
#3: The first bullish Heiken Ashi candle needs to have a bigger than
average upper wick OR You can also wait until you see a bullish
Heiken Ashi candle with no lower wick. However, this approach will
cost you some profits left on the table.
Step
#4: Buy at the market at the opening of the next Heiken Ashi candle
Step
#5: Hide your protective Stop Loss below the first bullish candle low
Step
#6: Take profit after we get a close below a previous bullish candle.
5
Key Rules For Heikin Ashi Trader
There
are broadly 5 rules that need to be followed when trading with Heiken
Ashi Candles. I have listed these below,
Rule
Number 1 – Green candles with no lower “shadows” indicate
a strong uptrend: When you spot these on charts, be in the trade and
don’t think about profit booking. You might want to add to your
long position and exit short positions.
Rule
Number 2 – Candles with a small body with upper and lower
shadows indicate trend change: These are indecision candles and
require more confirmation.
Rule
Number 3 – Red/Black candles with no upper shadow indicates
strong a downtrend: When you spot these on charts, be in the trade
and don’t think about profit booking. You might want to add to your
short position and exit long positions
Rule
Number 4 – Candles with long lower shadows represent Buying
interest. Always take note of these candles and assess price
action after you spot these candles.
Rule
Number 5 – Candles with long upper shadows represent selling
interest and be cautious with existing long positions if you
spot such Candles.
Rule
1 – Look for trend initiation candle (big/lengthy candle) , check
this when trend begins.
Rule
2 - Initiation candle should be followed by maintenance candle
(small one)
Heiken
Ashi Strategy On 5 Minute Chart
In
order to Trade this Double Bottom Momentum Pattern on a daily time
frame chart, there are Three rules you have to follow.
Rule
Number 1: The first Bottom Formed has to be on back of high
momentum. Clear Wide Range Candles should be visible.
Rule
Number 2: The Second Price Bottom should be formed on back of
low momentum. Most candles should be narrow range candles.
Rule
Number 3: You enter the Trade when you spot a long tail Heiken
Ashi Candle by keeping low of previous bottom as Stop loss.
Heiken
Ashi Strategy On Daily Time Frame Chart
Rule
1 and 2 are same as 5min chart.
Rule
Number 3: You enter the Trade when you spot Two Initiation
Candle and One Confirmation Candle. Stop loss for the Trade would be
below the low point of first price bottom.
Heiken
Ashi candle would be a combine with simple Stochastic Oscillator with
settings (14,7,3).
SHORT
SETUP
Once
the price prints two red consecutive candles after a series of green
candles, the uptrend is exhausted and the reversal is likely. SHORT
positions should be considered.
LONG
SETUP
If
the price prints two consecutive green candles, after a series of red
candles, the downtrend is exhausted and the reversal is likely. LONG
positions should be considered.
FILTERS
The
raw candle formation is not enough to make this day trading strategy
valuable. Trader needs other filters to weed out false signals and
improve the performance.
MOMENTUM
FILTER (Stochastic Oscillator 14,7,3)
We
recommend to use a simple Stochastic Oscillator with settings 14,7,3.
A
Trader would now:
Enter
long trade after two consecutive RED candles are completed and the
Stochastic is above 70 mark
Enter
short trade after two consecutive GREEN candles are completed and the
Stochastic is below 30 mark.
STOP
ORDER FILTER
To
further improve the performance of this awesome day trading strategy,
other filers might be used. I would recommend to place stop orders
once the setup is in place.
In
the long setup showed in the chart below, the trader would place a
long stop order few pips above the high o the second Heinkin-Ashi
reversal candle.
The
same would apply to short setups, trader would place a sell stop
order few pips below the low of the second reversal candle.
http://tos.mx/E7zjOxp
Haikin candle
- Buy next day if RED candle changes to GREEN, Sell next day if GREEN candle changes to RED candle.
- Look at 3.30-3.45 PM to find next day candle color.
- Make sure it is above 21 or 10 SMA also if MACD crossover happens in that point that is good signal for buy. for good success rate otherwise it will work but profit will be less and success rate is less.
- To avoid false signal use SMA, MACD, RSI along with candle color. You can get profit even in false signal but profit/success rate is small.
- if MACD is below signal line, price don't increase lot (it may rise slightly or go flat) but MACD is above signal price go up lot.
- if possible try few more indicators like DMI ADX RSI with candle color change to avoid false signal.
- MACD is for Long, if you use Stochastic it only works for few days like 3 to 7 days.
- use same to buy Options.
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