What it measures
Heikin Ashi ("average bar") replaces each candle with a smoothed one built from the current bar and the previous smoothed bar. Trends appear as long runs of same-coloured candles with no lower wicks; reversals show up as small-bodied candles with wicks on both sides. The chart is easier to read, which is also the problem.
The calculation
HA close = (open + high + low + close) / 4 HA open = (previous HA open + previous HA close) / 2 HA high = max(high, HA open, HA close) HA low = min(low, HA open, HA close)
The HA open is a recursive average, so each candle carries part of every candle before it.
Inputs and defaults
None. Some scripts smooth the result again with a moving average.
How it is read
A run of green candles without lower wicks is a strong uptrend; the first candle with a lower wick or a smaller body is read as the trend tiring; a colour change is the exit or reversal signal. Several of the screened strategies are exactly that: hold while the HA colour holds.
Where it fails
The HA close is not a price anyone could trade at. A strategy that enters and exits at HA values is backtesting against a smoothed series and reports fills that never existed; converted to real fills the result is usually worse, sometimes by a lot. The smoothing also delays every signal by construction, so the exit arrives after part of the reversal has happened.
How the desk reads it
When a screened strategy is built on Heikin Ashi, the desk checks whether orders fill at real prices or at HA values before reading any of its numbers. A backtest filled at HA values is a backtest of a series nobody can trade.
In the desk's screen
Of the 614 screened strategies in the library, 5 (0.8%) use this indicator somewhere in their logic.
2 of those were gross-profitable on enough cells to reach the after-fee replay.
- Eliora Gold 1min (Heikin Ashi) Many small trades · after-fee replay
- Range Filter Pro V4 Time of day · after-fee replay
- GXG Trend Engine Joining a move
- Heikin Ashi RSI Fade — Short Strategy Betting on a snap-back
- Sunil BB Blast Heikin Ashi Strategy Time of day
The count is read from the compiled code of each strategy in the library; a strategy that computes the indicator by hand under another name is not counted. The desk's own rules are not part of the count.