Introduction
If you are looking to trade binary options, then you must have already come across the term “Heiken Ashi.” Heiken Ashi is a popular trading technique that is used by many traders to make informed trading decisions. In this article, we will discuss how you can use Heiken Ashi to trade binary options.
What is Heiken Ashi?
Heiken Ashi is a type of candlestick chart that is used to identify trends and predict future price movements. Unlike traditional candlestick charts, Heiken Ashi charts use a modified formula to calculate the candlestick values. The modified formula takes into account the open, close, high, and low prices of the previous candlestick to calculate the values of the current candlestick.
Advantages of Using Heiken Ashi
One of the biggest advantages of using Heiken Ashi charts is that they filter out the noise and help traders to identify the overall trend. Heiken Ashi charts are also useful in identifying trend reversals at an early stage, which can help traders to take profitable trades.
How to use Heiken Ashi to Trade Binary Options
To use Heiken Ashi to trade binary options, you first need to open a binary options trading account with a reputable broker. Once you have opened an account, you can start trading binary options using Heiken Ashi charts.
Step 1: Identify the Trend
The first step in using Heiken Ashi to trade binary options is to identify the trend. To do this, you need to look at the color of the Heiken Ashi candles. A green Heiken Ashi candle indicates an uptrend, while a red Heiken Ashi candle indicates a downtrend.
Step 2: Look for Reversal Patterns
Once you have identified the trend, the next step is to look for reversal patterns. One of the most common reversal patterns is the Doji candlestick pattern. This pattern occurs when the open and close prices of the candlestick are the same or very close to each other. A Doji candlestick pattern indicates indecision in the market and can be a sign of a trend reversal.
Step 3: Place Your Trade
After identifying the trend and the reversal pattern, the final step is to place your trade. If you are trading a call option, you should place your trade when you see a green Heiken Ashi candle and a Doji candlestick pattern. If you are trading a put option, you should place your trade when you see a red Heiken Ashi candle and a Doji candlestick pattern.
Conclusion
In conclusion, Heiken Ashi is a powerful trading technique that can be used to trade binary options. By using Heiken Ashi charts, traders can filter out the noise and identify the overall trend, which can help them to take profitable trades. If you are new to trading binary options, we recommend that you practice using Heiken Ashi on a demo account before trading with real money.
