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Heikin Ashi charts look like typical candlestick charts, but they smooth out price action because their bars are computed out of price ranges rather than every tick movement. The Heikin Ashi technique is designed to filter out market noise and provide a clear picture of the prevailing conditions in the market. 

Traders can read price action by watching candlestick types or patterns when using normal candlestick charts. When using the Heikin Ashi technique, traders can accurately determine trends when a valid trend is in the market and when it pauses or is likely to reverse. 

The technique can help traders decide whether they should stay in the market or exit the trade. Munehisa Homma introduced Heikin Ashi in the 1700s, the same individual that also created the typical Japanese candlestick charts. 

The Formula and Calculation for Heikin-Ashi Candles

Normal candlesticks include information (open, close, high, and low prices). Heikin Ashi candlesticks also use these values, including information from previous periods. 

Here is the formula for calculating Heikin Ashi candles:

Open

The open of a Heikin Ashi candle is the midpoint of the previous candle. 

Open = (open of previous candle + close of previous candle)/2

Close 

The close of a Heikin Ashi candle is the average price of the current period.

Close = (Open + Close + High + Close)/4

High

The high of a Heikin Ashi candle is the maximum price reached during the current time. 

High = Maximum price reached

Low

The low of a Heikin Ashi candle is the minimum price reached during the current time period. 

Low = Minimum price reached

 

Heikin Ashi Trading Strategies

When it comes to carrying out a Heikin Ashi strategy, here are the signals that Heikin Ashi delivers:

New Trend

It is easy to qualify a new trend using Heikin Ashi. This is done when candles change from bearish to bullish, or vice versa. This allows traders to catch a strong trend from its early beginning and ride it all the way. 

Strong Trend

Candles with no shadows depict a strong trend. A strong uptrend will be depicted by a series of candles with no lowers wicks, whereas candles will depict a strong downtrend with no upper wicks.

Pauses and Reversals

Heikin Ashi is great at illustrating when a trend is pausing or about to reverse. Candles with small bodies depict this. When there are candles with small bodies, it is a signal for traders to decide whether they can exit the trend, use a trailing stop, or book partial profits.

Trade Examples Using Heikin Ashi

Heikin Ashi charts smooth out price action, making trends easier to spot and false reversals less distracting. When paired with other technical tools, they can provide clear entry and exit signals for different market conditions.

Example 1: Trend Entry with Moving Average Confirmation

  • Setup: EUR/USD on a 1-hour chart.
  • Process: Apply a 50-period Simple Moving Average (SMA) alongside Heikin Ashi candles.
  • Signal: Enter long when Heikin Ashi turns green and closes above the SMA, indicating bullish momentum.
  • Exit: Close the trade when a red candle appears fully below the SMA.

Example 2: Momentum Exit with RSI

  • Setup: Gold (XAU/USD) on a 4-hour chart.
  • Process: Use Heikin Ashi candles for trend identification and RSI for momentum confirmation.
  • Signal: Stay in a long trade while candles are green. Exit when RSI crosses below 70 and Heikin Ashi turns red, signalling weakening momentum.

Example 3: Filtering Choppy Markets

  • Setup: GBP/JPY on a 15-minute chart.
  • Process: Combine Heikin Ashi with the MACD indicator.
  • Signal: Only take trades in the direction of the MACD histogram and moving average crossover, reducing noise during sideways price action.

Limitations and Confirmation Techniques

While Heikin Ashi charts excel at smoothing out market noise, traders should be aware of their limitations and apply confirmation methods to improve decision-making.

Delayed Signals

Because Heikin Ashi candles use averaged data, trend reversals may appear later than they do on traditional candlestick charts.
Solution: Use faster indicators (e.g., short-term EMA crossovers) to anticipate possible shifts earlier.

Missing True Price Data

Heikin Ashi modifies open and close prices, which means the exact market price is not shown.
Solution: Keep a standard candlestick chart open alongside your Heikin Ashi chart to monitor actual price levels.

Gap Representation

Price gaps, often visible on traditional charts, may be less pronounced or hidden on Heikin Ashi charts.
Solution: Check raw price charts to identify potential gap trading opportunities.

Vulnerability in Volatile Markets

During major news events, Heikin Ashi smoothing may mask sudden reversals or spikes.
Solution: Always confirm with tools such as:

  • Support and Resistance levels
  • Volume indicators to gauge market participation
  • Momentum oscillators (e.g., RSI, MACD) for divergence signals

Heikin Ashi Use Cases by Trading Style

Heikin Ashi charts can be adapted to various trading styles, from fast-paced intraday moves to long-term trend following. The key is aligning your strategy with the time frame and tools that suit your approach.

Scalping

  • Time Frame: 1-minute to 5-minute charts
  • Setup: Heikin Ashi candles with 9- and 21-period Exponential Moving Averages (EMAs).
  • Approach: Enter trades in the EMA’s direction when two or more consecutive candles confirm momentum. Exit quickly when colour changes signal potential reversal.

Swing Trading

  • Time Frame: 4-hour to daily charts
  • Setup: Heikin Ashi combined with RSI or stochastic oscillator.
  • Approach: Ride multi-day trends, ignoring minor pullbacks. Close positions when both indicator and candle colour shift.

Trend Following

  • Time Frame: Daily to weekly charts
  • Setup: Heikin Ashi with a 50-period SMA and trailing stop.
  • Approach: Stay in trades as long as candles remain in the trend’s colour and above the SMA. Use a trailing stop to protect profits during prolonged moves.

Integrating Heikin Ashi into AvaTrade Platforms

Heikin Ashi is natively available in both MetaTrader 4 (MT4) and MetaTrader 5 (MT5), provided by MetaQuotes.

It transforms price data into smoother, average-based candles to enhance trend visualisation, without the need for additional downloads

How to Set Up Heikin Ashi in MT4 and MT5

  1. Open your chart in MT4 or MT5.
  2. Navigate to the Indicators panel, then locate and select Heikin Ashi from the built-in list.
  3. Apply it to the chart — no additional settings are required beyond choosing your preferred colour scheme.

Custom and Enhanced Versions

  • Some advanced traders prefer a Heikin Ashi Smoothed indicator, which uses smoothed price series to further reduce false signals. While this variant is not built-in, it’s widely shared and trusted in community forums.
  • Other developers offer feature-rich versions, such as a Heikin Ashi Volume-Weighted indicator, which integrates volume data to refine signal quality especially in low-volume environments.

Best Practices on AvaTrade Platform

  • Use the native indicator for simplicity and reliability.
  • If exploring smoother signals, consider adding the smoothed or volume-weighted versions—but always validate any third-party scripts thoroughly.
  • Pair Heikin Ashi with other AvaTrade-compatible tools such as Moving Averages, RSI, or support/resistance overlays to confirm trade signals effectively.

Putting Heikin Ashi into Practice with AvaTrade

Heikin Ashi charts are a powerful way to see the bigger picture — whether you’re scalping for quick profits, swing trading over several days, or following long-term trends.

By smoothing out noise and highlighting momentum shifts, they give traders the confidence to stay in winning trades and exit losing ones more decisively.

With AvaTrade, you can explore Heikin Ashi across MT4, MT5, and WebTrader, switching effortlessly between chart types to find the view that works best for your strategy.

Pair Heikin Ashi with your favourite technical indicators, test ideas in a risk-free demo account, and then move to a live account when you’re ready to trade with real capital.

Trading success starts with the right tools — and with AvaTrade, you have everything you need to analyse, plan, and execute effectively.

Start trading smarter — open your AvaTrade demo account today, explore Heikin Ashi, and master your trading style before going live.

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FAQ

  • What is a Heikin Ashi chart?

    It’s a type of candlestick chart that averages price data to smooth out noise and make trends easier to identify.

     
  • Can I use Heikin Ashi in MT4 or MT5?

    Yes — both platforms include Heikin Ashi as a built-in indicator, ready to apply to any chart.

     
  • Is Heikin Ashi good for day trading?

    Yes, many day traders use Heikin Ashi with short EMAs to capture quick moves while filtering out false signals.

     
  • Does Heikin Ashi show the real market price?

    Not exactly — it displays averaged prices, so keep a standard candlestick chart open for exact market levels.