Using Heiken Ashi Indicator for Trading and Finding Market Bottom • There were 34 stock market corrections in five decades • A simple system correctly signaled 31 market bottoms • Not intermediate bottoms, but The bottom • This system will be the focus of our discussion • No curve fitting, not subjective, nothing complex Disclaimer Any investing/trading idea or recommendation or opinion contained in this document/presentation/mail is for education and/or entertainment only. We are not and do not represent agents, brokers, stockbrokers, broker dealers or registered financial advisers. We do not accept any responsibility for loss due to any person acting or refraining from acting as a result of material contained in this document/presentation/mail. Past performance is no indication or guarantee of future results. This mail may contain information and opinions believed to be reliable, but the accuracy cannot be guaranteed, we are not responsible for any errors or omissions. Version 1.4 (incorporating corrections after the SIG presentation on April 11 th , 2009 ) April 12 th , 2009 Ravi Jagannath [email protected]
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Using Heiken Ashi Indicator for Trading and Finding Market Bottom
Using Heiken Ashi Indicator for Trading and Finding Market Bottom. There were 34 stock market corrections in five decades A simple system correctly signaled 31 market bottoms Not intermediate bottoms, but The bottom This system will be the focus of our discussion - PowerPoint PPT Presentation
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Using Heiken Ashi Indicator forTrading and Finding Market Bottom
• There were 34 stock market corrections in five decades• A simple system correctly signaled 31 market bottoms• Not intermediate bottoms, but The bottom• This system will be the focus of our discussion• No curve fitting, not subjective, nothing complex
DisclaimerAny investing/trading idea or recommendation or opinion contained in this document/presentation/mail is for education and/or entertainment only. We are not and do not represent agents, brokers, stockbrokers, broker dealers or registered financial advisers. We do not accept any responsibility for loss due to any person acting or refraining from acting as a result of material contained in this document/presentation/mail. Past performance is no indication or guarantee of future results. This mail may contain information and opinions believed to be reliable, but the accuracy cannot be guaranteed, we are not responsible for any errors or omissions.
Version 1.4(incorporating corrections after the SIG
presentation on April 11th, 2009 )April 12th, 2009Ravi Jagannath
Indicators:•8 EMA•21 EMA•Slow Stochastic•Bollinger Bands•Heiken Ashi (HA)
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Heiken Ashi as a part of a setup – Trend line break
•Trend line break
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Heiken Ashi as a part of a setup – Entry#1
First Entry Option:•HA color change•Break below 21 EMA
1
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Heiken Ashi as a part of a setup – Entry#2
Second Entry Option:•Double top
2
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Heiken Ashi as a part of a setup – Entry#3
Third Entry Option:•Retracement to 21 EMA•Retracement to neckline•Close below 21 EMA
HA color rotation confirms the trend
3
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Heiken Ashi as a part of a setup – Final Exit
Exit
Heiken Ashi Exit:•Two-bar color change
EURUSD 120 minJan 24– Feb 03 2009EURUSD 120 minJan 24– Feb 03 2009
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Thus there are a number of applicationsHeiken Ashi color change can
be used:a. To confirm entriesb. To find entries at
retracementsc. To add to position at
retracementsd. Exit trade…making it easier to ride a
trend.
Additional uses:e. Visual assessment of trend
strengthf. Visual confirmation across
multiple timeframes
Heiken Ashi color change can be used:
a. To confirm entriesb. To find entries at
retracementsc. To add to position at
retracementsd. Exit trade…making it easier to ride a
trend.
Additional uses:e. Visual assessment of trend
strengthf. Visual confirmation across
multiple timeframes
Exit
1
3
2
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HA rules to consider
Heiken Ashi rules:1. Entry confirmation with one
or two bar color change2. One bar color change not
adequate to exit trade3. Color change in the direction
of trend on retracement confirms another entry
4. Two bar color change usually is a good exit in itself at the end of a strong trend
Heiken Ashi rules:1. Entry confirmation with one
or two bar color change2. One bar color change not
adequate to exit trade3. Color change in the direction
of trend on retracement confirms another entry
4. Two bar color change usually is a good exit in itself at the end of a strong trend
Exit
1
3
2
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Some issues to be aware of
ISSUE MANAGING THE ISSUE
The ‘exit on two bar color change’ rule can result in pre-mature exits during a not-so-strong trend.
Long candles at entry/exits can eat into the meat of the trend that a normal trend trader targets.
Limit the use of this rule to the anchor-chart (the largest timeframe chart). It may help to confirm the exit with another indicator during a not-so-strong trend.
Real-time monitoring of the trade with and confirming exit signal may alleviate the problem.