Module #1 Heiken Ashi Strategy
Welcome to The Basics of the Noble Impulse Strategy - Heiken Ashi
The objective of this lesson is to provide an overview of how to properly implement the Noble Impulse indicator on your trading. The majority of this lesson will be spent on how to use Noble Impulse with Heiken Ashi candles.
First of all, what is Noble Impulse? Noble Impulse is an algorithm that runs on top of the MetaTrader 4, MetaTrader 5, and now available in TradingView. What Noble Impulse provides to users is a signaling indicator that instantly shows a buy and sell arrows on any chart.
How Does It Work?
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This is what can make or break your trading.
What are Heiken Ashi Candlesticks?
Most traders prefer to use the regular candle ticks charts for their analysis but most are not aware of the Heiken Ashi candlesticks. Heiken Ashi has recently gained popularity, especially to new traders because it’s easier to identify trends when using Heiken Ashi.
In this section, we will give you a brief explanation on how these modified candlestick works. As well as a comparison of regular candlestick and Heiken Ashi candlestick when using Noble Impulse.
This Heiken Ashi candlestick can limit the signals given by Noble Impulse on default settings by 1/3.
What are the Heiken Ashi candlesticks? Heiken Ashi (sometimes referred to as Heikin Ashi) is a distinctive type of Japanese candlesticks that are calculated using the current and previous price data. The term “Heiken Ashi” simply means “average bar” in Japanese. Heiken Ashi candlestick was developed in the 1700s by a Japanese trader named Munehisa Homma. So, it’s been around for quite a while.
If you look closely at the Heiken Ashi chart above, you can see that it’s relatively similar in appearance to regular Japanese candlestick but the open and close prices are calculated differently.
How is the Heiken Ashi candlestick calculated?
We are not going to go in-depth about Heiken Ashi itself. The main goal of this strategy section is to show you how Heiken Ashi limits the signals by 1/3 by filtering the trend. At the end of the day, it is your decision whether you will apply this strategy along with Noble Impulse.
As we mentioned previously, the Heiken Ashi candlestick is based on price data from the current close-open-high-low, the current Heiken Ashi values, and the previous Heiken Ashi values.
Formula to calculate the Heiken Ashi candlestick
The Heiken Ashi Close is the average of the open, high, low, and close for the current period.
- Close = ¼ (Open + High + Low + Close) The average price of the current bar
The Heiken Ashi Open is the average of the previous Heiken Ashi open plus the close of the previous Heiken Ashi candlestick.
- Open = ½ (Open of Previous Bar + Close of the Previous Bar) The midpoint of the previous bar
The Heiken Ashi High is the maximum of three data points.
- High = Max (High, Open, Close)
The Heiken Ashi low is the minimum of three data points.
- Low = Min (Low, Open, Close)
Significance of Heiken Ashi candlesticks
Heiken Ashi charts make candlestick charts more readable for traders, especially when spotting trends and reversals. As a trader, you need to know when to get out as soon as the trend weakens and when to stay in and ride a strong trend.
Overall, Heiken Ashi will filter the noise and smooth out the price action on your chart by showing data using averages. These signals may make identifying trading opportunities easier than with traditional candlesticks because the trends are not easily interrupted by false signals.
Disadvantages of Heiken Ashi candlesticks
Heiken Ashi is very useful when it comes to spotting trends but they do have limitations and things that you need to consider if you plan on using them.
There are few things you need to look out for when using Heiken Ashi candlesticks.
- The Heiken Ashi candlesticks do not show the exact open and close prices because they are averaged.
- The Heiken Ashi candlesticks may still show a sign of trend even though there is a minor pullback in price.
- Another thing you need to watch out for is the closing of the price. The Heiken Ashi candlestick does not display the actual closing price. This is important, especially if you want to get in at a good price.
How to Properly Set up your chart with Heiken Ashi candlestick
Simply go to the chart type icon beside the timeframe and choose Heiken Ashi. Make sure to use this default Heiken Ashi.
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Heiken Ashi and Regular Candlestick Comparison
As mentioned above, Heiken Ashi tends to filter the trend by measuring the averages. This limits the signals given by Noble Impulse by 1/3 more or less. Therefore, the chances of winning will most likely increase because there are fewer signals to look at.
Noble Impulse with Regular Candlestick High Sensitivity Settings.
Noble Impulse with Heiken Ashi High Sensitivity Settings.
As you can see, there are 22 buy and sell signals on regular candlesticks. And there are 12 signals on Heiken Ashi candlesticks. This chart is just an example, there could be more or less signals depending on the market condition. Clearly, Heiken Ashi will minimize the signals of Noble Impulse by filtering minor fluctuations. Below is another example.
Noble Impulse with Regular High Sensitivity Settings.
Noble Impulse with Heiken Ashi High Sensitivity Settings.
Which Timeframe Works the Best?
There’s really no right or wrong answer to this question. Everyone has a different style of trading that suits their daily schedule. Most users prefer the 15-Minute and above timeframe.
Our team likes to use 1-Hour timeframe for day trading in the Forex market.
For stocks, if you’re planning to trade daily gappers and high volume stock for day trading we recommend using M1-M5. And for swing trade use H4 and up timeframe.
You are more than welcome to experiment with different timeframes. Always research and do your own due diligence if you’re planning to hold a certain stock.
Do you recommend using the Heiken Ashi candlestick?
This is optional. Though, the Heiken Ashi candlestick will filter the trends for you and minimize the signals given by the Noble Impulse indicator.
We believe that the regular candlestick is still the way to go because you can incorporate price action with Noble Impulse to increase your chance of winning.
Adjusting the Sensitivity Settings
To further minimize the signals and filter the trends, you can adjust the sensitivity settings. Check Module #4 for more details about adjusting the sensitivity settings. Make sure to read the Module #2 and Module #3 before that.
You have finished the Noble Impulse Heiken Ashi Strategy. When you’re ready, you can check out the Intermediate strategy. We will be using Noble Impulse along with some of the most popular indicators that many people are already using successfully.
At the next section, you will know more about where to place stop loss, exit targets, and how to filter false signals.
If you need any assistance or have any questions, please reach out to us via email on our website under the contact us section or the email down below. Noble Impulse offers 24/7 support. But due to high traffic, it may take a few hours for our support team to respond. We will do our best to get back to you in a timely manner.
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