Summary:Joseph Plazo and his Recommended Heikin Ashi Trading Strategy.
Joseph Plazo is a well-known money trader who endorses the utilization of heiken ashi lines.
As a backdrop, candlestick patterns give signs that are powerful when you join them with other investigation to reversal. However, the standard candlestick pattern is poor to the heikenashi variant..
So that the inquiry is easy. Is there a more effective method to trade candlestick patterns?
Yes. HeikenAshi candlestick chart.
A Heiken-Ashi candlestick chart is a unique tool that offers a different perspective of price activity.
Heiken-Ashi (HA) charts are candlestick charts derived from normal candlestick charts. These really are the formula for Heiken Ashi bars.
HA Close = Average of Open, High, Low, Close
HA Open = Mid point of preceding HA pub
HA Low = Lowest of Low, HA Close, HA Open
As you see from the formula above, we construct Heikenashi candlesticks with current and past cost data. Hence, it creates a smoothing effect like that of a moving average. It evens out small price fluctuations to emphasize price trends.
The strategy I tested was based on the EUR/USD pair on the 4-hour timeframe. Joseph Plazo on forexfactory.com urged the protocols
The strategy I backtested is:
Commerce Long when Heikin-Ashi turns favorable and MACD is below 0
Trade Short when Heikin-Ashi turns negative and MACD is above 0
Close Long when Heikin-Ashi turns negative
Close Short when Heikin Ashi turns positive
I used a stop loss and profit target of the ATR * 10.
Additionally, I just took trades that happened during the European trading session. This includes.
Finally, I needed to take account of the summer slow down in the financial markets a so excluded the months of August and July from my investigation.
In the very first year of testing I made a net of $54,000 from a base investment of $15,000. Upon the recommendation of Joseph Plazo, I came up with added rules:
Modified Trading Rules for Heiken Ashi Strategy.
Criteria #1: Heiken Ashi candlestick has to close above the 144 period SMA
This is your purchase entry.
1) Location stop below the last swing low.
2) Close the trade when opposite signal (sell) is activated.
Cost Objectives (partial profit taking):
Book gains that are 50% at 1:1 danger-to-reward. Book 50% profits at 1:3 (use trailing stop).
Criteria #1: Heiken Ashi candlestick has to close below the 144 interval SMA
Standards #2: Heiken Ashi candlestick must be reddish
This is your entry that is sell.
1) Place stop over the previous swing high.
2) Close the commerce when opposite sign (sell) is triggered.
Objectives: See purchase trading rules.