Can You Run a Trading Strategy on Heikin-Ashi Charts?
Most read
Trading strategies perform differently on Heikin-Ashi charts because the price data is calculated using averages, not actual market prices. To avoid discrepancies, traders should use a standard chart with Heikin-Ashi-based indicators rather than trading directly from a Heikin-Ashi chart.
How Heikin-Ashi Charts Differ from Standard Charts
Heikin-Ashi charts are often used to smooth price movements and highlight trends, making them visually appealing for traders. However, they do not represent actual market prices the same way as standard candlestick or bar charts. This can create issues when running trading strategies, as the price data used to trigger signals does not always match real market prices.
Why Strategies Perform Differently on Heikin-Ashi Charts
When a strategy is designed for a regular chart, applying it to a Heikin-Ashi chart can result in different trade signals and execution prices. This happens because Heikin-Ashi bars are calculated differently—they use an average of previous prices instead of actual market open, high, low, and close values.
For example:
• A buy signal on a standard chart might trigger at $101.838, but on a Heikin-Ashi chart, the same trade could execute at $102.076 due to how the candles are formed.
• This discrepancy can affect entry and exit prices, stop-loss levels, and overall strategy performance.
Adjusting for Heikin-Ashi in TradingView
TradingView offers an option under Strategy Properties called “Use Standard OHLC Values”. Enabling this setting allows TradingView to approximate real price data while still displaying a Heikin-Ashi chart. However, even with this setting enabled, results may still not fully match a standard price chart.
The Recommended Approach
Instead of running a strategy directly on a Heikin-Ashi chart, a better approach is to:
• Use a standard chart and apply Heikin-Ashi-based indicators to it.
• Extract Heikin-Ashi values using Pine Script or pre-built indicators in TradingView.
• Avoid trading directly from non-standard charts like Renko, Range, or Heikin-Ashi, as they do not reflect actual execution prices.
Conclusion
While Heikin-Ashi charts provide a cleaner view of trends, they do not accurately represent real market prices, which can lead to incorrect trade executions. Traders should use standard charts and extract Heikin-Ashi values separately if they want to incorporate this data into their strategy.