Heikin Ashi – What’s That?
You’re probably already familiar with the three most common chart types: the line chart, bar chart, and candlestick chart.
But there’s another powerful charting method you should know about—one that presents price action in a completely different way.
It’s called Heikin Ashi.
(And no, it’s not a type of beer. 🍺 Let’s stay focused—this is about trading, not happy hour!)
Heikin Ashi, sometimes spelled Heikin-Ashi or Heiken Ashi, is a unique charting technique that might look similar to traditional Japanese candlesticks at first glance—but don’t be fooled. The way the candles are calculated and displayed is very different.
Traditional candlesticks are great for identifying potential trade entries, like spotting a reversal pattern (hello, shooting star!) or a breakout (bullish marubozu, anyone?).
But what happens after you’re already in a trade?
That’s where Heikin Ashi comes in.
Heikin Ashi charts help smooth out price fluctuations and highlight the overall trend direction, making it easier to decide whether to stay in a trade or exit when the trend begins to weaken.
In simple terms, Heikin Ashi is a modified version of the candlestick chart. It reorganizes price data to reduce market noise, helping trend-following traders make more confident decisions.
Some traders—especially those with a longer-term perspective—prefer Heikin Ashi over traditional candlesticks. Others use both, switching between them to get a clearer picture of the market.
So, what does “Heikin Ashi” actually mean?
In Japanese:
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Heikin = "average"
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Ashi = "pace"
Together, Heikin Ashi means “average pace of price.”
The technique dates back hundreds of years and was created by Munehisa Homma, a legendary rice trader from Sakata, Japan. He’s widely regarded as the father of candlestick charting.
Think of it like this:
Darth Vader is to Luke Skywalker as Munehisa Homma is to Heikin Ashi. 😄
Homma discovered that by tracking rice prices closely, he could better understand the emotions and psychology driving market participants—and capitalize on that insight.
Here’s what a Heikin Ashi chart looks like:
(Insert example chart here)
At first glance, it may resemble a typical Japanese candlestick chart.
Each Heikin Ashi candle has a body and may include an upper and/or lower shadow (also called a wick).
But don’t be fooled—they're not the same.
There’s a key difference in how these candlesticks are built and interpreted.
Let’s dive into what makes Heikin Ashi so different…