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HEIKINASHI

TRENDS MADE SIMPLE.


MTA Webinar November 14, 2012

Dan Valcu, CFTe


Educofin Ltd

Disclaimer
The material provided in this presentation is for general informational purposes only.
This Information is not intended as investment advice, as an offer or solicitation of an
offer to sell or buy, or as an endorsement, recommendation or sponsorship of any
company, security, or fund. The opinions and analyses included in the presentation and
subsequent communication are based on sources believed to be reliable and written in
good faith, but no representation or warranty, expressed or implied is made as to their
accuracy, completeness or correctness. We cannot and do not assess or guarantee the
suitability or profitability of any particular strategy, or the potential value of any
strategy or informational source. You bear responsibility for your own investment
research and decisions, and should seek the advice of a qualified professional before
making any investment. You may lose part or all of your investment, and if you engage
in margin transactions your loss may exceed the amount invested. Further,
performance in the past is no guarantee of that in the future, and each member of this
audience understands that some results in this presentation are the results of
backtesting, and as such are merely hypothetical.
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Can you find the guitar?


The Old Guitarist
(Picasso)

Pierrot and the Guitar (Dali)


Man with Guitar (Braque)
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Which chart looks better?


Japanese Candles

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vs.

Heikin-Ashi Candles

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Heikin-ashi in a nutshell
1. Visual
2. Quantifiable
3. Replacement or confirmation for candlestick
patterns

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The 10-second trend technique

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Understanding heikin-ashi
Price filter technique for discretionary trading
Can be used as a stand-alone or confirmation
technique
Visual (HA charts) + quantification (haDelta)
Delays (HA charts) + earlier signals (haDelta)
BYO money & risk management

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HA and your risk management

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HA and your risk management

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Western introduction
February 2004

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Heikin-ashi and the brain


Left Side

Right Side

Quantifiable
heikin-ashi

Visual
heikin-ashi

haDelta & Co.

HA candles

Heikin-Ashi
Heikin-ashi appeals to all traders/investors
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Heikin-ashi as a visual tool


Japanese-style technique
Heikin-ashi (modified) candles
Appeals to right-side of the brain (visual traders)
Heikin-ashi candles
Can you trade only with visual tools?
Yes/No

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The heikin-ashi foundation


Modified OHLC values:
haClose, haOpen, haHigh, haLow

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Heikin-ashi patterns
Only three
Up

Down

Doji-like

3 simple HA patterns vs. 100+ documented Japanese candlestick patterns


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Heikin-ashi rules
1

A sequence of white bodies identifies an uptrend


A sequence of filled bodies identifies a downtrend

Uptrends get stronger with longer white bodies and upper shadows
Downtrends get stronger with longer black bodies and lower shadows

Trends get weaker with smaller bodies or when both lower and upper
shadows emerge

A consolidation is revealed when a series of smaller bodies with both


upper and lower shadows emerges

A trend reversal is likely with the emergence of a small body with long
upper and lower shadows (doji-like candle) or a sudden color change

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Visual heikin-ashi

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Heikin-ashi quantification
If you cannot measure it, your knowledge
is of a meager kind.
Lord Kelvin

Heikin-ashi candles can be quantified


Western approach to analysis and trading
Technical indicators (left-brained, analytical
traders)
haDelta & Co.
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Heikin-ashi quantification

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Heikin-ashi quantification

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Heikin-ashi quantification

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Japanese candle patterns today

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Japanese candle patterns


100+ patterns

Fluid definitions
Subjective interpretations
In the context
Many patterns are complex

For visual traders, for connoisseurs


Problems with trading JC patterns
Quantifiable strategies added

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All in one
Heikin-ashi provides only
3 patterns
5 rules

For both visual and analytical traders/investors


Heikin-ashi candles and indicator(s)
Very short learning curve
Heikin-ashi does not care about context

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Heikin-ashi vs. candle patterns


Heikin-Ashi

Candle Patterns

3 patterns

100+ patterns

5 rules

N rules/pattern

Short learning curve

Long learning curve

Small investment (time, $)

Big investment (time, $$$)

Visual + Quantifiable

Visual

More objective

Subjective, artistic

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Chart Gallery

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October 4, 2011

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haDelta to the rescue

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Heikin-ashi vs. candle patterns

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Heikin-ashi vs. candle patterns

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Heikin-ashi vs. candle patterns

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Heikin-ashi vs. candle patterns

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Heikin-ashi vs. candle patterns

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Heikin-ashi vs. candle patterns

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Heikin-ashi vs. candle patterns

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Heikin-ashi vs. candle patterns

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haDelta

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Averages with heikin-ashi

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HA and multiple time frames

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HA and multiple time frames

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HA and multiple time frames

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Conclusion
A visual and quantifiable technique
For trends and reversals (suitable to replace
candlestick patterns)
Simple, easy to learn and apply
Only 3 patterns and 5 rules
Used as a stand-alone or confirmation tool
BYO risk and money management
As with every indicator, HA is NOT a $$$ printing
press
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Heikin-ashi+
Author of the the first book on
heikin-ashi
Site: www.educofin.com
Blog: heikinashi.wordpress.com
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@heikin_ashi
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Thank you

Q&A
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