Heikin Ashi Candles Explained

What Heikin Ashi is

Heikin Ashi (Japanese for "average bar") is a candle chart built from averaged prices instead of the actual open, high, low and close of each period. Ordinary candles show exactly what price did. Heikin Ashi candles show a smoothed version of it.

Because each candle blends in data from the one before, colours tend to stay the same for longer, and small back-and-forth moves fade. This makes trends easier to see. It also means the candle you see is not the real price, which is the most important thing to understand before using Heikin Ashi candles.

For other ways of drawing price, see chart types.

A drawn example

The sketch below is illustrative only. It shows a market that rises, pauses and turns down.

On the real chart, the small dip in the middle shows as a down candle. On the Heikin Ashi chart, the same dip is absorbed into the averaging, and the colour stays "up" until the selling is strong enough to pull the average down. This is why the trend looks cleaner, and also why the turn shows up later.

The formula

Each Heikin Ashi (HA) candle is built from the current real candle and the previous HA candle:

Some practical consequences:

• The HA open is almost never the real open. It is the midpoint of the previous HA candle, so it carries old information forward.
• The HA close is not the last traded price. You cannot read the current market price off a Heikin Ashi candle.
• Gaps disappear. A weekend gap on a real chart becomes a smooth step on HA.
• The very first candle on the chart has no previous HA candle. Platforms usually start it from real prices, so the earliest bars on a chart can differ slightly between platforms or data histories.

Default settings

The standard Heikin Ashi indicator has no period or length setting. It uses the formula above and nothing more. Its inputs are usually only colours for up and down candles.

"Smoothed Heikin Ashi" versions exist as custom indicators. They apply a moving average to prices before, after, or both before and after the HA calculation, and they add period and method settings. Longer periods give smoother candles and more delay. These are not the classic method, so check which version you are looking at before comparing results with someone else. For the averages themselves, see the EMA indicator and SMA indicator.

How to add it in MT4 and MT5

In MetaTrader the indicator is usually spelled "Heiken Ashi".

• MT4: open the Navigator window, expand Indicators, then the custom indicators list, and drag Heiken Ashi onto the chart. You can also use the Insert menu, then Indicators, then Custom.
• MT5: in the Navigator, expand Indicators, open the Examples folder, and drag Heiken Ashi onto the chart.

The indicator draws HA candles on top of the normal chart. To see only the HA candles, switch the chart to a line chart or set the normal candle colours to match the background. Folder names can differ between builds, so if you do not see it, search the Navigator. For platform details, see MetaTrader 4 and MetaTrader 5.

How to read Heikin Ashi candles

Common readings, described as tendencies, not rules:

• Up candles with no lower wick: steady upward pressure in the averaged data.
• Down candles with no upper wick: steady downward pressure.
• Small bodies with wicks on both sides: indecision or slowing momentum. These often appear before a colour change, but not always.
• Shrinking bodies in a trend: the averaged move is losing strength.
• Frequent colour changes: a range or choppy market, where Heikin Ashi adds little.

A colour change describes what the average has done. It does not predict what price will do next.

Typical uses

Traders commonly use Heikin Ashi to:

• Filter noise when judging trend direction, often on a higher timeframe alongside a normal chart on a lower one (multiple timeframes).
• Stay patient in a trend by watching colour and wick behaviour instead of every small pullback.
• Confirm a trend view from other tools, such as market structure or ADX.

A "Heikin Ashi strategy" usually means combining these readings with entry, exit and risk rules. Any such strategy should be tested on a demo account first, because HA results on past charts can look better than live results (see below).

Where Heikin Ashi misleads

• Lag. Averaging delays colour changes. In a sharp reversal, a large part of the move can pass before the colour turns.
• Wrong price for orders. Stop-loss, take-profit and entry levels must be set from real prices. A stop placed at an HA low may sit far from the real low.
• Backtest illusion. Testing that assumes fills at HA open or close uses prices that never traded. Results can look much better than reality. Test on real prices.
• Ranges. In sideways markets, HA flips colour often and gives no edge over normal candles.
• Candlestick patterns. Classic candlestick patterns are defined on real candles. On HA they are not the same patterns.
• Real support and resistance. Highs, lows and gaps are distorted, so draw support and resistance on a normal chart.
• Unfinished candles. The current HA candle changes until its period closes, and its open depends on the previous candle, so read signals from closed bars only.

Risk note

Heikin Ashi is a display method, not a forecast. Leveraged forex and CFD trading can lose money fast, including more than you planned if stops are set from averaged rather than real prices. Read risk management and check the rules in Pakistan on regulation and safety.

Frequent questions

Is Heikin Ashi an indicator or a chart type?

Both descriptions are used. In MetaTrader it is added as an indicator, but it works as an alternative way of drawing candles.

Does Heikin Ashi repaint?

Closed HA candles do not change. The current candle changes until it closes, like any candle. Smoothed custom versions should be checked individually. See repainting indicators.

Can I see the real price on a Heikin Ashi chart?

Not from the candles. Use the bid and ask in the platform, or a normal chart alongside.

Which timeframe works best?

No timeframe is right in general. Lower timeframes give more noise and more colour flips; higher ones give smoother candles with more delay.

Is Heikin Ashi better than normal candles?

It is different, not better. It shows trend direction more clearly and hides real price detail. Many traders use both together.