Heikin-Ashi
A way of drawing candles from averaged prices. It filters out small swings, so the direction of a trend is clearer to see.
What Heikin-Ashi candles are.
Candles built from averages, so each one shows the trend more than the moment.
Heikin-Ashi is a Japanese charting technique. The name means “average bar”. It draws candles like a normal chart, but each one is calculated from averaged prices.
A normal candle shows the exact open, high, low and close of one period. A Heikin-Ashi candle blends the current period with the candle before it. The result is a smoother chart with fewer colour changes.
That smoothing has a cost. The open and close on a Heikin-Ashi candle are calculated values, not prices you can trade at. Orders on MetaTrader 5 fill at real market prices.
How it is calculated.
Four values per candle, each built from the real bar and the Heikin-Ashi candle before it.
Close: average the whole bar.
Add the real open, high, low and close of the period and divide by four. This is the Heikin-Ashi close.
Open: the middle of the last candle.
Add the previous Heikin-Ashi open and close and divide by two. Each new candle opens halfway up the body of the one before.
High: the highest of three.
Take whichever is highest of the real high, the Heikin-Ashi open and the Heikin-Ashi close.
Low: the lowest of three.
Take whichever is lowest of the real low, the Heikin-Ashi open and the Heikin-Ashi close.
HA open = (previous HA open + previous HA close) ÷ 2
HA high = the highest of the high, HA open and HA close
HA low = the lowest of the low, HA open and HA close
The first candle on a chart has no candle before it, so its open is the midpoint of the real open and close. Because every later candle opens inside the last one, Heikin-Ashi charts rarely show gaps.
| Normal candles | Heikin-Ashi candles | |
|---|---|---|
| Prices shown | The real open, high, low and close. | Averaged values, not prices you can trade at. |
| Gaps | Shown when price jumps between periods. | Mostly smoothed away. |
| Colour changes | Frequent, even inside a trend. | Fewer, so a trend shows as a long run. |
| Turns | Show up as soon as they happen. | Show up a little later. |
| Most useful for | Exact levels, entries and stops. | Seeing the direction at a glance. |
How to read it.
Four things traders look for. None of them is a signal on its own.
Long runs of one colour.
A string of up candles shows buyers have been in control. A string of down candles shows sellers have. The longer the run, the steadier the move has been.
Candles with no wick on one side.
In a strong rise, up candles often have no lower wick. In a strong fall, down candles often have no upper wick. Both show steady one-way pressure.
Small bodies with long wicks.
A small body with wicks above and below shows indecision. After a long run, it can mean the move is losing strength.
A change of colour.
The first candle of the other colour can mark a pause or a turn. Many traders wait for a second candle before treating it as a change.
Common mistakes.
Where traders new to Heikin-Ashi most often go wrong.
Reading Heikin-Ashi values as real prices. The close on the chart is an average, so your fill and your stop sit at real market prices.
Setting stops from Heikin-Ashi highs and lows. Check the normal candles first, because the true high or low can be further away.
Expecting it to catch turns early. Averaging makes it slower than normal candles, so a reversal shows up a little late.
Using it in a sideways market. Without a trend, the colours flip often and the chart says very little.
Using it on MetaTrader 5.
MT5 for desktop comes with Heikin-Ashi as an example indicator, spelled Heiken_Ashi.
Open a chart.
In MetaTrader 5 for desktop, open the instrument and timeframe you want to study.
Find the indicator.
Open the Navigator window, expand Indicators, then Examples, and find Heiken_Ashi.
Drag it onto the chart.
Drag Heiken_Ashi onto the chart and confirm. It draws Heikin-Ashi candles over the normal ones.
Hide the normal candles.
Switch the chart to a line chart, then open the chart properties with F8 and give the line the same colour as the background. Only the Heikin-Ashi candles stand out.
Save it as a template.
Right-click the chart, choose Templates, then Save Template, so you can reuse the same set-up on other charts.
Questions, answered.
What traders ask most about Heikin-Ashi.
01What does Heikin-Ashi mean?
02Can I trade at Heikin-Ashi prices?
03Is Heikin-Ashi better than normal candles?
04Which timeframe should I use?
05Can I practise with it first?
Practise it on a demo.
Add Heikin-Ashi to a chart on a free MT5 demo and compare it with normal candles before you trade with real money.
Trading CFDs on a live account puts your capital at risk and you can lose money. A demo does not.