When viewing Heikin Ashi candlesticks for the first time, they are likely to appear quite similar to the typical candlesticks used in binary options trade analysis. Their calculation is not the same, however, as conventional Japanese candlesticks only show Opening, High, Low, and Closing asset prices. Heikin Ashi candles are marked on charts by their relation to the past candles and their primary advantage is to paint a clearer picture of price movement.
Too much clutter can lead traders to close trades early out of the feat that the underlying asset price is going to reverse. These candles provide a much simpler reflection of asset price action. As such, trends become a lot less difficult to identify early on, and the ease of utilizing this kind of candlestick is excellent. The moment you’ve closed a bullish candlestick, you’ll be able to open a binary options Call, or a Put position trade following the closing of a bearish Heikin Ashi candlestick.
Due to the fact that they make use of averages within calculations, Heikin Ashi candlesticks can lag a bit. However, this can prevent premature early trade closure, so most don’t see the small lag as a major drawback. Where this candlesticks shine is in their ability to smoothly display asset price movement and eradicate some of the more problematic emotions that binary options traders experience. Provided that Heikin Ashi candlesticks do not change color, you’ll know for certain that your trade is heading in the the right direction.
Since these candlesticks are interlocked by means of numerical computation, they provide a much better view of underlying asset price action and are not merely a separate reflection of price like conventional candlesticks. An additional benefit is the simple fact that the vast majority of charting programs offer Heikin Ashi as one of the default indicators. This means that you will not have to scour the internet in search of them. Just be sure that you select a great charting tool and there should be no problems.
How To Apply the Heikin Ashi Strategy
The optimal use of the Heikin Ashi strategy is to enter your binary options trades using the price direction suggested by their color. As soon as that color changes, exit the open trade. An opposite direction trade at this point could also be an excellent idea. Some of the best trading strategies are those which offer traders more than one profit opportunity based off the same technical analysis.
Similar to other binary options tools, Heikin Ashi candles require verification from various other market variables such as Support and Resistance or any indicator which can display overbuying or overselling. Just remember the colors: blue – Call, red – Put. But also remember that in order to have confidence in them and stick to their signals even when traditional candlesticks are showing indecision or possibly even price reversal.