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Key Takeaways
- HA open and close are calculated averages. HA high and low retain or extend the raw period’s extremes.
- HA close averages current raw OHLC; HA open is the midpoint of the previous HA body.
- Each new HA body begins at the prior body’s midpoint, creating a connected sequence across raw-price gaps.
- Body direction compares HA close with HA open. When a bar with a positive high-low range shows no lower wick, price never traded below the HA open, the classic sign of a strong uptrend.
- Define the HA condition, then use the raw-price series for the entry, size and exit in the trading plan.
What is a Heikin Ashi chart?
A Heikin Ashi chart is a candlestick-style chart built from averaged prices. Each bar’s close averages the current raw open, high, low and close, and each bar’s open is the midpoint of the previous Heikin Ashi body. The averaging smooths the display and makes runs of same-direction bars easier to read than on a raw candlestick chart.
Because each new body begins inside the preceding body, the display connects across gaps in the raw-price series and gives a different view of successive price intervals.
How is Heikin Ashi calculated?
HA close = (O + H + L + C) / 4. HA open = (previous HA open + previous HA close) / 2.
HA high = max(raw high, HA open, HA close). HA low = min(raw low, HA open, HA close).
For valid raw OHLC, HA close lies inside the raw range. The transformed high retains or extends the raw high, and the transformed low retains or extends the raw low.
Seed the first HA open with the raw open/close midpoint for this example. Carry full precision and round only the displayed prices.
Formula
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)- Open, high, low, and close on the right side of each equation are the raw values of the current bar.
- This example seeds the first HA open with (raw open + raw close) / 2. Keep full precision through subsequent calculations.
- With the same raw OHLC, a different HA-open seed matters less on every bar, because the gap between seeds halves with each update.
Heikin Ashi calculation example
Three illustrative daily bars in one stock. Bar 1 opens 100.00, high 101.20, low 99.60, close 100.90. Bar 2 opens 100.80, high 102.40, low 100.50, close 102.10. Bar 3 opens 102.30, high 103.10, low 101.40, close 101.70.
- Bar 1 HA close = (100.00 + 101.20 + 99.60 + 100.90) / 4 = 100.425, displayed as 100.43
- Bar 1 HA open, seeded: (100.00 + 100.90) / 2 = 100.45
- Bar 2 HA open = (100.45 + 100.425) / 2 = 100.4375; HA close = 101.45
- Bar 2 HA low = min(100.50, 100.4375, 101.45) = 100.4375, equal to HA open
- Bar 3 HA open = (100.4375 + 101.45) / 2 = 100.94; HA close = (102.30 + 103.10 + 101.40 + 101.70) / 4 = 102.13
Raw bar 3 closes at 101.70 below its 102.30 open, while its HA close of 102.13 sits above the 100.94 HA open. The raw bar is down and the HA bar up, and the HA close sits 0.43 above the raw close, so entries and stops come from the raw chart.
The raw candle compares its own open and close, while HA compares the current four-price average with a carried body midpoint, so the same bar prints down on the raw chart and up on the HA chart here.
How to read Heikin Ashi wicks
For an input bar with a positive high-low range, no lower HA wick means raw low is at or above HA open, and no upper HA wick means raw high is at or below HA open. A bar that prints one price throughout has no wick on either side.
These conditions describe the relationship to the carried average. For example, raw O=110, H=110, L=101 and C=101 produce an upward HA body from 100 to 105.50 with no lower wick when the carried open is 100.
Use the measured HA shape as the condition in a rule. Select raw or transformed inputs explicitly when applying another price-based indicator.
Heikin Ashi vs regular candlesticks on the same bars
The paired figure supplies a seed and six subsequent raw candles, then calculates their HA values. HA 5 closes at $101.30; the resulting HA 6 open and high round to $101.72.
Read the raw lane for prices and the HA lane for trend direction. With the same raw inputs, a different starting HA open fades by half on every bar, so a few bars of history erase most of it.
How traders use Heikin Ashi
Define a completed-bar condition, such as a run of upward HA bodies or a specified colour change. Use Support and Resistance on the raw-price chart to define entry, invalidation and target.
Sweeps in Options Flow that keep landing in the direction of the Heikin-Ashi run back it, and the Options Profit Calculator prices the trade to your raw-chart target by expiration.
Limitations of Heikin Ashi
- Heikin Ashi opens and closes are averages, not traded prices. In the worked example, bar 3's HA close is 0.43 above its raw close, so entries, stops and fills must come from the raw chart.
- Check the raw candle when an HA run looks intact. Averaging adds lag, and the HA body keeps its colour after raw prices turn here: bar 3 has an upward HA body although the raw bar closed below its open.
- Trade completed bars. The forming bar keeps updating until it closes, and a different seed or loaded history shifts the early values until the difference halves away.
- Read gaps from the raw candles. Connected HA bodies hide them.
- Name the input for every indicator. Indicators calculated on HA inputs differ from the same indicators on raw prices.
Bottom line
Heikin Ashi turns raw OHLC into averaged, connected bars that make trend runs and pauses easier to read. Use it as a trend filter on completed bars, and take every entry, stop, target and fill from the raw-price chart.
Clear answers
Frequently Asked Questions
Sources and Further Reading
- Schwab thinkorswim Learning Center: Heikin Ashi Chart
- Technical Analysis of Stocks & Commodities: Using The Heikin-Ashi Technique (Dan Valcu, V. 22:2)
- Fidelity Learning Center: Charting with the newly available technical indicators
How entries are sourced, calculated and updated: editorial methodology.