Heikin-Ashi
Heikin-Ashi is a candlestick chart type where each candle is built from averaged prices. It smooths out noise and shows trends more clearly, but it does not show real traded prices.
How it works
The name is Japanese for "average bar". The Heikin-Ashi close is the average of a normal candle's open, high, low and close. The open is the midpoint of the previous Heikin-Ashi candle's open and close. The high and low are the extremes among the real high or low and those two numbers.
Because of the averaging, colours come in long runs. A strong uptrend shows a string of green candles with almost no lower wicks; a strong downtrend shows red candles with almost no upper wicks. Small bodies with wicks on both sides point to a pause or a possible turn.
Heikin-Ashi helps you stay in a trend instead of bailing on every red candle. The downside is lag, and the prices are calculated: you cannot place stops or measure entries from them, you need a regular chart for that.
Regular candle: open $100, high $110, low $96, close $108. Previous Heikin-Ashi candle: open $98, close $102. Then HA close = (100 + 110 + 96 + 108) / 4 = $103.50, HA open = (98 + 102) / 2 = $100, HA high = $110, HA low = $96.
The main mistake is treating Heikin-Ashi prices as real and placing orders or measuring profit from them. The HA close can be off from the real price by several percent. Use Heikin-Ashi to read the trend, but do entries, stops and backtests on regular candles.
Questions and answers
What is Heikin-Ashi in simple terms?
It is smoothed candles built from average prices. They filter out small swings so the trend is easier to see.
Why does the Heikin-Ashi price not match the exchange price?
Because the candles are calculated from averages, not from actual trades. The current HA close is an average, not the last traded price.
Is Heikin-Ashi good for scalping?
Usually not: it lags and hides exact prices. It is more often used on hourly and daily charts to ride a trend.
Related terms
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Updated: 2026-10-19