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Normal Forex & Crypto Trading · Chapter 3

Momentum Trading with Heikin Ashi

Master Heikin Ashi candles for Forex & Crypto momentum trading. Learn to read trends, configure TradingView, and build testable trading rules—all risk-free.

⏱ 90–120 minutes 🎯 Hands-on practice 📖 Lesson 01 of 1
Important Reminder Forex and crypto trading are high risk and speculative. Everything on this website is for education only and not financial advice. Never trade with money you cannot afford to lose. Always start with a demo or paper trading account. For real investment decisions, consult licensed financial professionals in the Philippines.

What you’ll be able to do after this lesson

  • Explain how Heikin Ashi (HA) candles are computed and how they differ from standard candlesticks.
  • Configure TradingView to use HA correctly (and display real prices for risk management).
  • Read momentum with HA (no-wick candles, color transitions, doji-like bars) and combine HA with MA/RSI/MACD for confirmation.
  • Draft simple, testable rules for trend-pullback entries, stops, and exits using real price (not smoothed HA values).
  • Journal and review performance to improve discipline, not chase signals.

Introduction: Your first momentum lesson

Heikin Ashi is your momentum magnifying glass. You’ll learn to see trends more clearly by smoothing out market noise— like switching from a shaky handheld camera to a stabilized one. We’ll go step-by-step so the technique feels simple and practical by the end of this lesson.

Key reminder: HA helps you see momentum, but you’ll always use real price for your actual orders, stops, and targets.

Prerequisites

Before starting this chapter, you should have completed the Beginner Course and be familiar with:

  • Basic indicators: Moving Averages (MA), RSI, MACD, Volume
  • TradingView basics (navigation, chart types, saving layouts)
  • Trading journal fundamentals

Final reminders for PH learners

  • Build financial foundations first (budget, emergency fund), then trade carefully.
  • Markets (especially crypto) are volatile and 24/7; protect mental health and sleep.
  • No signal service. Your edge is a documented plan + disciplined execution + journaling.
Risk Management Demo first. Keep rules simple. Use real prices for risk management. Journal and review consistently.

Lesson roadmap

Section 1 — Big Picture: Why Heikin Ashi?

Why HA
  • Plain meaning: “Heikin Ashi” ≈ “average bar”
  • Trade-off: smoother visualization = lag
  • HA doesn’t show exact OHLC

Keywords: HA Formulas · Smoothed Price

Section 2 — Heikin Ashi vs. Standard Candlesticks

Formulas
  • Standard candles: true OHLC (precision)
  • HA formulas: Close, Open, High, Low averaging
  • Side-by-side comparison: choppy vs smooth

Keywords: OHLC · HA Close/Open

Section 3 — TradingView Setup

Workspace
  • Switch chart type to Heikin Ashi
  • Enable “Real prices on price scale”
  • Add: 20 EMA, 50 EMA, RSI 14, MACD 12-26-9
  • Save layout as “HA Momentum – FX+Crypto”

Keywords: TradingView · EMA · RSI · MACD

Section 4 — Reading HA Momentum

Signals
  • Strong up-momentum: green candles, no lower shadows
  • Strong down-momentum: red candles, no upper shadows
  • Exhaustion: small-bodied / doji-like candles

Keywords: No-Wick Candles · Doji

Section 5 — Building a Simple HA Momentum Play

Rules
  • Context filters: trend (20/50 EMA), momentum (RSI, MACD)
  • Prototype rules for long/short entries
  • Entry by real price; stop below swing low; 1.5–2.0R target

Keywords: Trend Filter · R-Multiple

Section 6 — Common Pitfalls (and Fixes)

Avoid mistakes
  • Pitfall: treating HA values as real price
  • Pitfall: trading HA signals alone in a range
  • Pitfall: over-fitting settings
  • Fix: use real price, add trend filters, keep rules simple

Bonus — Historical note

Quick context
  • Dan Valcu popularized HA in TASC (2004)
  • Classic formulas documented for English-language traders

Keywords: Dan Valcu · TASC 2004