You’re probably familiar with the three popular chart types: line chart, bar chart, and candlestick chart.
But there’s another type of chart that you should know about that uses a totally different technique to display price action.
The Heikin Ashi (HA).
This is a charting technique used to display prices that, at a glance, looks similar to a traditional Japanese candlestick chart.
The difference is the method used in how candlesticks are calculated and plotted on a chart.
Traditional Japanese candlesticks are great at helping you find good entry points.
This is because they display potential reversals (like a shooting star) or breakouts (like a bullish marubozu closing above a resistance level).
But what about once you’re IN a trade?
Applying the HA technique to a price chart can help you decide whether to stay in the trade or get out.
Heikin Ashi charts make candlestick charts more readable for traders who want to know when to stay in a trade.
Or ride a strong trend and when to get out when the trend weakens.
Basically, Heikin Ashi is a modified candlestick charting technique.
It rearranges how the price is displayed so trend traders can have a higher confidence level when deciding whether to remain in a trade or exit.
Some traders, usually longer-term traders, use Heikin Ashi charts as an alternative to traditional Japanese candlestick charts.
Other traders use them in conjunction with traditional Japanese candlestick charts, switching back and forth between the two.