HOW TO TRADE With Heiken Ashi Candlesticks (Heiken Ashi Trading Strategy) – Part 3 πŸ”₯πŸ”₯

– [Narrator] Welcome
to the Part Three on How to use Heiken
Ashi Candlesticks In a trading strategy. Concepts we discuss here
(bell rings) will help you use
Heiken Ashi Candlesticks in your existing strategy, and will help you
use Heiken Ashi as a standalone
trading strategy. Now, once I’m finished
with this part, I will then begin application of same in intraday, swing,
and positional trading. Now, what I’m going to
explain here is very simple and this is something you
can start implementing from Monday morning. So let’s get started. Let us first begin with
the most common mistake committed by traders when
using Heiken Ashi Candlesticks. All charts used in this
video are of daily time frame unless I specify otherwise. Look at the chart
in front of you, traders here attempt to go short whenever they see a down
candle and they attempt to buy whenever they see
an up Heiken Ashi candle. This approach is not right
and it leads to more whipsaws as by the time a
trader buys or shorts, the entire move is already over. I’m sure this must have
happened to you as well, as this was one of the
most basic problems I faced when I started trading with
Heiken Ashi Candlesticks. (bell rings) Always remember that
charts and charting methods need to be viewed
within overall context. Without this, you
will find it difficult to assess a chart and
opportunities presented by same. When it comes to Heiken
Ashi Candlesticks, you need to know that the
best way to incorporate this is to use this with your
existing trading strategy. You can also trade it
on a standalone basis but by combining it
with your own strategy, you will add another
dimension of analysis to your own trading strategy. Personally, in my own trading, I use Heiken Ashi as a
trend trading indicator. Now, Heiken Ashi is primarily
used for trend trading as it filters out most of
the random noise from price. It is important for
you to understand that which Heiken Ashi
candles you need to focus upon and which ones you
have to ignore. Let us now understand
this in detail. In this chart, price has
moved 20% from this region. During the same time,
there are these series of Heiken Ashi Candles which
suggest trend reversal. As a trader, you need to know which candles have
impact on trend and which ones are
counter trend candles which have limited or
no underlying impact. For example, after series
of indecision candles, price moves lower here. Momentum here is missing
as neither down candles nor up candles are
initiating trend candles. It is only in this region that
we get two initiation candles followed by
confirmation candles. From thereon, price
starts to moves lower. Now, look at these candles here. Traders here exit the trade as Heiken Ashi candles
start reversing, whereas these
candles, if you see, have no bearing
on existing trend. All these candles I have marked
are extremely small in range and have no element of momentum. Therefore, the prior trend which
was down is still in place. Price then again moves
lower with momentum till a long tail candle shows up and then price begins
to move sideways. If you look at the
candles in this region, these are relatively
wide in range and have both initiation
and confirmation candle. These are the regions where you
should be exiting the trades as this might lead
to trend reversal. I hope this particular
point is clear. Always divide your
candles into two types, that is candles that
have impact on trend and candles that have no impact. This way, you will know
which ones to focus upon. Just as normal price charts, structure of higher
high and higher low along with lower
high and lower low works very well with
Heiken Ashi charts. In my opinion, this
trending structure works better in Heiken Ashi
charts than when you compare it with normal candlestick
charts or bar charts. The main reason for this
is that Heiken Ashi charts represents price movement without much random
noise on the chart. After we discuss
about time frames, pull up your Heiken Ashi charts and check for this
trending structure. You’ll be amazed to see
how well this works. In this chart in front of you, look at how well the structure
of lower high and lower low has worked over
a period of time. At all times, whenever we have
had counter trend candles, neither of these candles could move higher than
previous swing high. This means, counter
trend candles were happening within context
of lower high and lower low and hence, such candles
should be ignored. Without this reference point, you will be inclined
to exit trades based on these counter trend
candles that I’ve marked here. In this region, after the
long tail demand candle, it is the first time
that price forms a structure of higher
high and higher low, and then price starts
moving sideways. Such type of price action is
what leads to a trend reversal or a pause in current trend. And this is where you have to think about exiting
your current trade or reducing your position and booking profit
on existing trades. Let us now discuss about
time frame selection. One of the most common
mistakes in Heiken Ashi is to select lower time
frames for trading. Do remember that Heiken Ashi
is a trend trading indicator and the lower the
time frame you select, the noisier the trend will be. Lower time frame
selection is mostly due to traders willing to
generate daily income in form of short-term
trading or scalping. While this approach
is not wrong, learning to trade with
higher time frame first is more important to understand
how Heiken Ashi works. Once you understand Heiken Ashi on a higher time frames chart, it will be much easier
for you to then use it on a lower time frame chart. Do note, concepts that
we discuss in this video remain the same
irrespective of time frame. This chart that you see is
of daily time frame chart wherein Heiken Ashi
Candlesticks are more decisive and can be used to analyze trend and devise a trading strategy. Now, compare this chart with
a five-minute time frame chart and then see the difference. On a five-minute
chart, if you see, you cannot spot trend
initiation candle as there is just not enough
time for one to form. By the time a couple
of candles form, trending move is already over. Most of the candles on
shorter time frame chart are narrow in range
and are indecisive. This mainly tells us two things. Number one, Heiken
Ashi Candlesticks have to be used
in a different way on a shorter time frame chart, and number two,
for trend analysis, we would require higher
time frame chart. Towards the end of this
video, I’ll be showing you how to trade Heiken
Ashi candlesticks on a higher time frame chart and on a lower time frame chart. Now, before we move to the
section of trend analysis, let me just take 10
seconds to explain what are initiation candles and what are
continuation candles. This is for those who
missed the previous video. Initiation candles
are those that lead to trend change in price and continuation candles
are those that move price in the direction of trend. Initiation candles are
wide-range candles, whereas continuation candles
are smaller in range. Now, link to both the
videos will be given at the end of this video. Before we move to entry,
exit, and stop loss, let me first show you
how to analyze trend using Heiken Ashi Candlesticks. Let us recollect
two important rules we discussed in
the previous video. Rule number one: up move in
price most of the time happens on back of smaller candles and hence one should
be patient with these as confirmation
comes in a bit late. Rule number two: down
move in price happens with wider-range candles and
you must seek confirmation before deciding to short
sell the stock or index. In this chart, you get set
of bullish candles here that set the trend
for remaining days. Post this, you get these
two indecision candles here which have no bearing
on the ongoing trend. Also, look at the range
of all candles here. With each passing
day, range of candles have expanded suggesting
underlying momentum in price. This indecision candle here,
along with all these candles, again have no
impact on the trend. One common mistake is to
exit positions at this point as bearish candles
begin to show up. Look at the range
of these candles. Apart from these two candles, all candles are small in range. Even these two candles have had no confirmation
after they appeared. This clearly reflects lack
of momentum on the down side. If you look at
these two candles, these appear as initiation
candle on the down side but again, there
is no confirmation. We again get long tail
bearish candle at this point which suggests demand in price. Price then moves higher
in the direction of trend. There are two important things you have to consider
in up trend. Number one, are bearish candles
strong and wide in range? And number two, have bearish
candles been confirmed? If you ask these two
questions in an up trend, more often than not, you will succeed in being
with the trend till it lasts. Let us now look at down trend. In this chart,
you’ll see the set of two candles at this point. These are trend initiation
candles on the down side. Confirmation for these
candles come at this region in form of these two candles. We then get these
indecision candles which have no bearing
on the underlying trend. This is mainly because these
are very small in range and do not reflect any
demand at this stage. Furthermore, we then get these
three candles on the downside that again reaffirm
the direction of trend. Following this, indecision
candles again show up which are small in size
and then price moves lower. All these three set
of indecision candles that I have marked here have
no impact on underlying trend. While this is easy to
see this in hindsight, it is difficult to maintain calm when these appear in real time. This is mainly due to the fact that such candles are perceived
to be trend-changing candles and once these appear, trader
begins to exit positions in anticipation of trend change. Now, at this region, we get two initiation
candles on the upside. However, post this, there is no confirmation
candle that shows up. Instead, we get these
set of indecision candles that suggest hesitation
in price to move higher. Post this, we get these candles
that are high on momentum and take price lower
in days to come. Always remember you don’t have to react to counter
trend candles unless they are wide in range and confirm decisive
trend shift in market. In Heiken Ashi,
you have to learn to ignore irrelevant candles and you have to focus on candles that help you determine
path of least resistance. If you want to
combine Heiken Ashi with your existing
trading strategy, then this is how
you should be using Heiken Ashi Candlesticks to
assess the direction of trend. Let us now move to the section of Heiken Ashi Trading Strategy where we will be discussing a high probability
trading pattern and how to trade it on a
shorter time frame chart and a longer time frame chart. Let me now show how you can
use Heiken Ashi Candlesticks to trade a simple yet very
effective trading strategy. You can trade this strategy
on a smaller time frame chart and on a longer
time frame chart. Before we get to time frames,
let us first understand the basic concept of
this trading strategy. What we are going
to discuss today is a double bottom momentum
pattern which is very different from the standard
double bottom pattern seen in technical analysis. A standard double bottom
is where price revisits a previous bottom and takes
support in this region. The problem with double bottom is that it is prone to
whipsaws as quite often, price pauses near
the previous bottom and then heads lower. This is one of the main reasons
why standard double bottom is not used that often
as a trading strategy. A much better way to
trade double bottom is by adding element
of momentum within it. By doing the same, you
will add an extra dimension to the standard
double bottom pattern. Now, look at this
chart in front of you. When first bottom is formed,
look at all these candles here. Most of the candles
are high on momentum and represent trend
bias on the down side. Now, look at the second
bottom that is formed. As price approaches the
previous bottom that is here, look at all these candles here. Other than this candle
that I’ve marked, all other candles
are low on momentum and are narrow range candles. What this signifies is that when compared with
first price bottom, during the second attempt, price has lost
substantial momentum and is much more likely to
take support in this region. In this strategy, we
are using a combination of rising momentum
in first price bottom along with combination of falling momentum
in second price bottom to identify high
probability trades. When you view this on Heiken
Ashi Candlestick chart, it is much easier
to spot this pattern when compared to a
standard candlestick chart. Let me now show you when
you should be avoiding this double bottom
momentum pattern. In this chart, the
first price bottom is marked here in this region. Look at all the candles here. All are wide in range
as each represents strong momentum on the downside. Price here makes an attempt
to make a double bottom, but then fails and moves lower
than the first price bottom. Now, the question is,
could you have spotted this in real time in the first place? Look at these four candles
that were formed here. As price approached the
first price bottom region, each candle that was formed was
wider than the previous one, clearly representing
momentum on the downside. When you spot expanding candles near a previous price bottom, avoid taking the trade as
you clearly want momentum to be a lot lower as
price approaches the
region of support. If you go back to
the previous chart, as price approached
region of support, candles were narrow in range and were not indicating strong
momentum on the downside. Let us now discuss complex
case of this pattern. It’s important to note
that double bottom does not mean that
price will move higher on a immediate basis. At times, you will see
that price consolidates and we must be prepared
for such scenarios. More importantly,
during such phases, you need to understand
how to read price action so that you don’t exit
early from your positions. In this chart, first
bottom forms here with wide range candles
that are high on momentum. Post this, price
again moves lower to test the first
price bottom region. If you were trading here, you should have skipped
taking the trade as price is testing
out support region with wide expanding candles. This clearly reflects
momentum on the downside and these are precise situations
where you should step away. Always remember that at times, price will not immediately
qualify for a trade. It may consolidate
more, move sideways, and then move higher. This happens quite often
while trading this pattern, and hence, you have
to keep this in mind. Let us think of
one more example. Now, this example is even more
complex than the previous one and hence, do pay attention. The first bottom in price
is formed around this region with wide range candles. All Heiken Ashi Candles here suggest strong momentum
on the down side. Price then revisits
this region of support with narrow range candles
suggesting loss of momentum, making it a perfect
region to take the trade. Look at what happens
from thereon. We don’t get any
momentum on the upside and price again revisits
the demand region with two strong wide
range bearish candles. The important question here is should you exit the
trade at this point? The answer to this
is a resounding no as price has not
violated this pivot and this pivot marked
in this region. Do not forget that
structure of higher high and higher low forms the
essence of trend trading and you have to keep this
in mind at all times. Price here again moves high to test the demand
region one more time. This time though,
the test happens with
narrow range candles which clearly signify
loss of momentum. The important thing
again is of being patient if trade does not work
on a immediate basis. You also need to use a
range of candle, momentum, and structure of higher
high and higher low to assess the structure of trend before beginning to
exit the position. In order to trade this double
bottom momentum pattern on a shorter time frame chart, there are three rules
that you have to follow. Rule Number One: 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 the low of previous
bottom as a stop loss. Now, let me state that
this is a risky strategy as you are not waiting
for initiation candle and confirmation candle. On a shorter time frame chart, by the time you wait
for initiation and
confirmation candle, 80% of the move will
already be done. Therefore, you cannot wait for
too many confirmation signals as you have limited
time on your hand. This is precisely why you
need a different approach on a shorter time frame chart and a different approach on
a longer time frame chart. On a lower time frame chart,
your risk reward is much higher as you are buying near
the previous support, and hence, if the trade
works in your favor, it will typically give you four to five times of
what you initially risk. In order to trade this double
bottom momentum pattern on a higher 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 and clear wide range
candles should be visible. Rule Number 2: the
second price bottom should be formed on
back of low momentum, and most of the candles should
be narrow range candles. Rule Number 3: you
enter the trade when you spot two
initiation candles and one confirmation candle. Stop loss for the trade
would be below the low point of the first price bottom. In this chart, momentum
is clearly visible as price forms the
first bottom here and then price again
revisits this demand region in form of three bearish
contracting candles. Post this, we get
two weak candles followed by another
set of candles which were much more stronger. Now, stop loss in this case would be the lowest point marked at this region on the chart. What I’ve shown here is a
case which works right away. More often than not,
you will get cases which are much more complex like the ones we
discussed in this video. Heading forward, I will now be
explaining about Heiken Ashi with respect to swing
trading, intraday trading, and positional trading
in respective Series of each topic that I’m doing. For starters, you must first
try and fit these concepts in your existing strategy and then try and trade
this on a standalone basis. Be careful with
time frame selection and first aim to trade this
on a higher time frame chart. If there is any doubt related
to double bottom concept, time frame and risk management, then let me know in the
comment section below. I read and reply to each
comment that is posted and hence don’t hesitate to
ask any doubt that you have, no matter how basic it is. So kindly consider
hitting the like button and sharing this video
if you find it useful. Thanks a lot for watching
this video, guys. Take care and be safe.

99 thoughts on “HOW TO TRADE With Heiken Ashi Candlesticks (Heiken Ashi Trading Strategy) – Part 3 πŸ”₯πŸ”₯

  1. Link to All Heiken Ashi Candlesticks Videos Is given here.

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    Kindly hit the Subscribe Button & Bell Notification Icon.

    Thanks For Watching Guys. Tc & Be Safe.

  2. Your videos are useful but too long bro..
    Please cover important points with in 10 min will increase your views as well

  3. Sir, really overwhelmed by the way you teach, every intricate thing you empasise, and the effort you take, to make these videos. Very rare on you tube, such a videos. Thank you. Please make video of safe option selling, keeping risk in control.

  4. Highly helpful vedio sir, Thank you very much. This vedio tells us we need to think the logic behind the patterns. Sir can we try this strategy to other patterns like Head n Shoulder ?

  5. Another best heiken ashi series from your end sir… Thanks😊
    For stock selection can we use the same concept as per your earlier videos or is there any screener which helps us to find the double bottom pattern?

    Waiting for ur 3rd part on future trading series..


  7. HA is nothing more than creating dillema when u r trading live. It's always easy to analyse in the hindsight as this person is doing here.
    Candlesticks and support resistance points work best in the live market.
    No hard feelings plz.
    All the best.

  8. Great videos as always , do u have any plans making videos on commodity trading?

  9. If it is not confidential kindly let me know the charting software being used – if it is free of course. Thank you.

  10. Great information and very noble of you to share your knowledge πŸ‘Œ

  11. Dear TradeWithTrend,
    As I really don't practice on Heiken Ashi charting, now onwards, by this video I'm sure going to follow for trend direction.

    Kindly answer to the previous queries.
    On about:
    1> Diff/Betw Future OI & Option OI?
    2> Option Greeks (in practical way to trade options)?
    3> Importance of VIX & how one should consider it real time?
    4> What's Ask & Bids? Is it important while trade?

  12. Thank you sir for explaining with stop-loss.
    I like to have stop loss after when it was moving up or down. because after moving up we will see undecided candle. So it will come little down and move up again.
    I hope u understand my issue.

  13. Request you to make a detail video on how to trade with Gann levels for intraday & positional.

  14. Content what u gave always new and intrestng…1 que …HA with respect to Moving Average (simple and Ema)?…
    I fing HA respect moving average on lower Timeframe…
    I like to hear from ur side….

  15. Hi sir,
    Very informative video.
    If more than two support created by stock then is it useful to apply above stretegy?
    Currently Maruti making 5 support on daily chart,
    Is it strong enough to trade on support,as more tail candle made on Heikin chart.
    Pl reply

  16. Thank you for your hard work, I keep checking to see if you have uploaded videos, every day πŸ™‚ thanks again for this wealth of knowledge which is priceless.

  17. Thanks for sharing the strategy, will try for sure. One problem that I have on HA is that , we know where the next candle opens and I find it predictable :-), that's why I stopped looking at HA candles for some time. Based on your new series, I once again started looking at HA charts

  18. Sirji, can u please check Idfc first bank daily chart, recently it made double bottom. I just want to know whether this scrip has all the ingredients for a long trade, ofcourse all risk will be my responsibility alone. Just your view. Thanks

  19. 21 minutes of happiness β€πŸ˜‹….Nice Strategy and Beautifully Explained πŸ‘‘

  20. Thanks for your effort and time. I use double bottom strategy, today you strengthen my strategy. The way you explained the complex case is awesome, we can't find this type of learning anywhere. I feel you are more special in teaching how to handle the real time difficulties during trading. Thanks a lot. Have a nice time.

  21. 😎 forgets all the rules in live market πŸ˜ƒ. Need lot of practice…… explanation is suuuuuuper. Will be trying from Monday itself.

  22. Very useful video. Thanks. Can you provide more clarity about stop loss as previous pivot point, if that pivot point is quite far then the risk would be higher then will it be advisable to have either monetary (x%) stop loss or previous day low. Will you be adding volume dimension for these trades in up coming videos? I think this will work good for swing trade than intraday as you mentioned by the time you get confirmation major part of the move gets over.

  23. Thanks for giving us another quality video!!.. I have a request to give training on ichimoku Cloud. Thanks!!

  24. Hi sir
    Is there any other technical indicator which can be used for conformation like stocastic or rsi or sma

  25. As usual .. improving knowledge..Only YouTube channel,which comments are also informative and I read always all comments.god bless u

  26. amazing strategy…. does this work well on options premium charts on 5mt, 15 mt charts

  27. MAN just recently im getting into heiken ashi, this is just what i needed! thank you!

  28. Dear may I expect from you to through some light on safe option trading(buying or writing). Because one can make money easily, risk free and consistently. Be cover Greeks in limited length. Thanks.

  29. Congratulations for making an excellent video. To the point without beating round the bush. I have not 7sed this system before but after such lucid explanation I will surely practice this art of trading. Thank you and looking forward to more such videos.

  30. Sir, Am Trading Nity Options Based on Heiken Ashi+ Ichimoku (1Hourly) from Last 7-8 Months, Best Strategy worked For me, bt if "GAP UP u or GAP DOWN" opening then bit difficult to follow this in NIFTY, Am am requesting u for In UP coming Vidieo please Explain GAP UP N GAP DOWN in Heiken ASHi. All 3 parts of are Sooooooopr.

  31. Sir can you also please make video regarding concept for for double top

  32. Nice, waiting for the strategy videos on the Heikinashi charts.

  33. I love your concept of pivot points.

    Risk reward is more favorable on the daily charts.

    THANKS, love the way you explain.

    Keep up the good work sir.

  34. Respected Sir your videoes are really helpful….I do have an earnest request to you that please make videoes on super trend indicator and it's usage in intraday and swing trading ….can we use super trend and heiken ashi combination for intraday and swing trading..? please suggest the respective time frames also…?

  35. Can you use this on high beta stocks like escorts ,ibullhsng or on banknifty options
    Kindly explain with example .secondly is the open of stock important .

  36. As usual an extra ordinary video…..very helpful for understanding price action with full conviction . sir its request takeout some to come live on you tube……

  37. Sir,
    Very nice video. Extraordinary video. I have not seen such a nice and informative video.

  38. Very nice Video. God Bless You. Sir I want to know about how to identify the Trend, Level, Support and Resistance of a particular Stock? If you have already uploaded the Videos on this matter kindly guide me.

  39. You have presented the best "Heiken Ashi" videos that I have come across so far… Well done… πŸ˜ŽπŸ‘

  40. All 3 videos were excellent. Easy to understand….Thanks

  41. Hi, please write part-3 in the heading as it took lot of time for me to find all the three videos. Please write Part1, Part2, part3 in heading of the respective videos. Thanks

  42. Sir, is there any other future videos for positional and swing? Will you provide more videos of heikin ashi for intraday too or will this video sufficient?

  43. sorry sir correct me….
    Sir i will use
    (.)identify intiation and confirmation candle…
    +5-8-13p ema…
    eaither bullish / bearish
    with Risk:Reward of
    I will only take trade looking matket condition Advance /decline ration. weaither market bullish /bearish….

  44. Thanks so much for the videos. One of it's kind. I trade forex, Can these same be applicable and is H1 high enough to trade this strategy on long time frame or I focus on the daily. Expecting more quality contents.

  45. Thanks for another valuable presentation of Heiken Ashi trading tips

  46. sir i new in option trading i use heikin ashi chart with 5 min as per your suggest i use upstox account but not effected still lose plz help

  47. Sir, Again too much explanation & presentations. Love you sir. Keep educating.

  48. The 2 initiation candles and confirmation candle have to be continous OR the confirmation candle can follow subsequently after some indecision candles

  49. This is without question the most useful and clarifying video on heikin ashi that I've ever watched. Thank you!

  50. Very Nice and informative video. Kindly elaborate how to use stochastic in this strategy. Regards.

  51. Can you explain how can this be combined with SMA or WMA chart trend confirmation and what SMA or WMA has to be used

  52. The best explanation I found about Heiken Ashi. I have a good entry win rate using Heiken Ashi.. but early exiting is my problem. This video helps me a lot. Thank you

  53. How do you differentiate between long tail candle and initiation candle. They look very similar with a wide body and long tail. Pls advice

  54. For all begginers in stock market Stay away from tips or call providers from indor mp they will take all ur money

  55. Yes. As you said I believe that when I combine Heiken Ashi sticks with my existing trading strategy works even much more better. Going forward I will implement for sure. Thanks a lot.

  56. Sir..Please acknowledge my big thank you for your effort , its working magic for me. Thanks a lot for your effort. If you can also combine how to trade Heineken candle with volume then this would be great help. Thanks again and lot of respect.

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