Regular candlestick charts are noisy. Wicks everywhere. False breakouts. You second-guess every entry. Heikin Ashi fixes that — it smooths out the noise so you see the trend clearly. Instead of wondering “is this a pullback or a reversal?”, Heikin Ashi shows you exactly when to stay in and when to get out.
What Is Heikin Ashi?
Heikin Ashi (Japanese for “average bar”) is a chart type that modifies each candlestick using the previous candle’s average price. The formula averages the open, close, high, and low of two consecutive candles, creating a smoother visual representation of price movement.
The result? A chart with fewer false signals. In a strong uptrend, Heikin Ashi candles are all green with no lower wicks. In a strong downtrend, they are all red with no upper wicks. The moment you see a candle with a wick or a color change, the trend is weakening — and that is your signal to act.
When this doesn’t work: Heikin Ashi lags behind real price because it uses averaged data. During low volatility or sideways movement, Heikin Ashi produces a series of doji-like candles that give no clear signal. Always use it with a second indicator for confirmation.
How to Read Heikin Ashi Candles
Before trading with Heikin Ashi, you need to read the candles correctly. The rules are different from regular candlesticks:
| Candle Pattern | Meaning | Action |
|---|---|---|
| Green candle, no lower wick | Strong uptrend — bulls are in control | Hold or enter CALL |
| Green candle with small lower wick | Uptrend weakening — sellers testing | Prepare to exit |
| Red candle, no upper wick | Strong downtrend — bears are in control | Hold or enter PUT |
| Red candle with small upper wick | Downtrend weakening — buyers testing | Prepare to exit |
| Small body with long wicks (doji-like) | Indecision — trend is stalling | Wait — no trade |
| Color change (green → red or red → green) | Potential trend reversal | Consider opposite direction |
When to Use Heikin Ashi
| Condition | Works | Avoid |
|---|---|---|
| Strong trending market | ✅ Heikin Ashi excels here | ❌ Whipsaws in choppy markets |
| Moderate volatility | ✅ Clean candle patterns | ❌ News spikes distort averages |
| Higher timeframes (5m+) | ✅ More reliable signals | ❌ 60-second turbo is too short |
| Trend following strategies | ✅ Perfect fit | ❌ Not for mean reversion |
The best time to trade Heikin Ashi is during the London or New York session when trends are strongest. Avoid the first 30 minutes after major news — wait for the averaged candles to settle.
Step-by-Step Trading Rules
Step 1: Switch Your Chart to Heikin Ashi
Rule: Change your chart type from Candlesticks to Heikin Ashi. Most platforms have this option in the chart toolbar or right-click menu.
Setup: 5-minute or 15-minute chart, any major pair. Add a 20-period simple moving average (SMA) as a secondary filter — it helps confirm the trend direction.
Action: Once switched, you will immediately notice the difference. Heikin Ashi candles look more uniform — that is the smoothing effect. Let your eyes adjust for a few minutes before looking for signals.
Step 2: Identify the Trend Direction
Rule: Look for at least three consecutive candles in the same direction with no (or very small) wicks on the opposite side. Three green candles without lower wicks = strong uptrend. Three red candles without upper wicks = strong downtrend.
Setup: 5-minute or 15-minute Heikin Ashi chart. Check that the SMA is sloping in the same direction — upward sloping SMA confirms a bullish trend, downward confirms bearish.
Action: Mark the trend direction. If the trend is up, you will only take CALL trades. If down, only PUT trades. No counter-trend entries — Heikin Ashi is a trend-following tool.
Step 3: Wait for a Pullback Candle
Rule: In an uptrend, wait for a single red candle or a green candle with a lower wick. This is the Heikin Ashi pullback — the trend is resting, not reversing.
Setup: 5-minute chart for faster trades. Watch for the pullback candle to form. A pullback in Heikin Ashi usually lasts 1-2 candles (vs 3-5 in regular charts).
Key distinction: A single red candle in a green sequence is a pullback. Two or more red candles in a row is a potential reversal. If you see two consecutive red candles, do NOT enter — wait for the trend to re-establish.
Step 4: Enter on the Next Green Candle
Rule: Enter a CALL trade when the next candle after the pullback closes green. The green candle confirms the trend is resuming.
Setup: 5-minute chart, expiry set to 15 minutes (3 candles).
Entry timing: Enter immediately as the green candle closes. Do not wait for additional confirmation — Heikin Ashi already filters noise, so waiting further reduces your reward without improving accuracy.
Step 5: Set Your Expiry and Exit
Rule: Set expiry to 3x the chart timeframe. On a 5-minute chart, use 15-minute expiry. On a 15-minute chart, use 45-minute to 1-hour expiry.
Why 3x? Heikin Ashi trends typically last 5-8 candles before a pullback. Three candles (3x timeframe) captures the majority of the trend move without holding too long.
Risk per trade: 2-3% of account. Never more.
Real Trade Example
Setup: GBP/USD, 5-minute Heikin Ashi chart with SMA 20.
Trend: Seven consecutive green candles with no lower wicks. SMA 20 sloping upward. Clear uptrend.
Pullback: A red candle appears at 10:15 AM — the first red candle in over 30 minutes. The lower wick is small, suggesting the pullback is mild.
Entry: The next candle (10:20 AM) closes green. CALL entry at 1.2650, 15-minute expiry, $15 trade size.
Outcome: GBP/USD continues upward for 5 more candles. Trade closes ITM at 10:35 AM — 85% payout ($12.75 profit).
Risk Management
| Parameter | Binary Options |
|---|---|
| Risk per trade | 2-3% of account |
| Max daily loss | 10-15% |
| Recommended expiry | 15 min (5-min chart) / 45 min (15-min chart) |
| Stop after | 3 consecutive losses |
| Minimum account | $100 |
| Trend required | 3+ same-direction candles before entry |
The biggest risk with Heikin Ashi is the lag. Because candles use averaged data, a reversal on the Heikin Ashi chart happens 1-2 candles later than on a regular chart. This means your stop-loss (if trading forex) needs to be wider, or your binary option expiry needs to account for the delay.
The fix: use 3x expiry and do not trade during low-volatility periods. If volatility is below average, Heikin Ashi loses its edge.
Pros & Cons
| ✅ Pros | ❌ Cons |
|---|---|
| Eliminates chart noise and false signals | Lags behind real price by 1-2 candles |
| Clear visual trend identification | Useless in sideways/ranging markets |
| Easy for beginners to learn | Real price may differ from Heikin Ashi |
| Works on any platform with chart type switch | Not suitable for 60-second turbo trades |
| Fewer trades = higher quality setups | Needs a second indicator for confirmation |
Which Platforms Support This Strategy
Heikin Ashi is a chart type, not an indicator — any platform that offers Heikin Ashi view supports this strategy. Here is how platforms compare:
Pocket Option — Best for Low Budget
Heikin Ashi available as a chart type in the toolbar. 15+ indicators to use for secondary confirmation. The $5 minimum deposit makes it easy to practice with real money. Crypto withdrawals process in 1-4 hours. Start practicing Heikin Ashi on Pocket Option →
IQ Option — Best for Multi-Timeframe Analysis
Heikin Ashi + SMA 20 available on all timeframes. The ability to split-screen 5-min and 15-min charts is valuable for confirming trends across multiple timeframes. Quick chart type switching without losing your indicators. Set up on IQ Option →
Olymp Trade — Best for Fixed-Time Trading
Heikin Ashi chart type built in with smooth switching. Fixed-time expiry pairs naturally with the 3x expiry rule. Built-in SMA 20 available for trend confirmation. Try Olymp Trade →
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Common Mistakes
- Using Heikin Ashi for 60-second turbo trades — Heikin Ashi lags by 1-2 candles. At 60 seconds, that is an eternity. Stick to 5-minute or higher timeframes.
- Confusing a pullback with a reversal — One red candle in a green sequence is a pullback. Two or more is a potential reversal. Wait for confirmation before entering against the prior trend.
- Trading in a sideways market — Heikin Ashi produces endless doji candles with small bodies in ranging markets. No clear signal means no trade. Period.
- Not using a second indicator — Heikin Ashi alone is not enough. Add SMA 20, RSI, or MACD for confirmation. Without it, you will enter false pullbacks.
- Setting expiry too short — Heikin Ashi moves are smoother but slower. A 5-minute chart needs at least 15-minute expiry. Shorter than 3x timeframe and you cut the move short.
FAQ
Is Heikin Ashi better than regular candlesticks?
Neither is “better” — they serve different purposes. Heikin Ashi is better for trend identification and filtering noise. Regular candlesticks are better for precise entry and exit timing. Most experienced traders use both: Heikin Ashi to identify the trend, regular candles to time the entry.
Can I trade Heikin Ashi on crypto pairs?
Yes, Heikin Ashi works well on crypto pairs like BTC/USD and ETH/USD, which often trend strongly. The higher volatility of crypto means trends last longer — giving Heikin Ashi more time to generate reliable signals. Use 15-minute charts for crypto to filter out the extra noise.
Do I need to add indicators to Heikin Ashi or is it enough alone?
Always add at least one secondary indicator. The SMA 20 or EMA 20 is the simplest choice — it slopes in the same direction as your Heikin Ashi trend. RSI is another good option to confirm that momentum supports the trend direction. Heikin Ashi alone will give false signals during pullbacks.
Next Steps
- Moving Average Crossover Strategy → — Combine Heikin Ashi with SMA 20/50 crossovers for even stronger trend signals.
- Trendline Strategy → — Learn to draw trendlines on Heikin Ashi charts for additional confirmation.
- Pocket Option vs IQ Option → — See which platform offers the best Heikin Ashi charting experience.
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