Transcription
If you're constantly getting faked out, second-guessing your entries, or feeling like the charts are just a wall of noise, you're likely trading on hard mode. Regular candlesticks show you every single tiny, irrelevant movement that does nothing but trigger your emotions.
So, in this video, I'm showing you the exact chart type that I use to cut through all of that noise and find consistent setups. Because once I ditched traditional candlesticks for what I'm about to show you, everything became clearer. I'll show you exactly how to set it up. I'll show you how to understand them. I'll show you also how to spot simple buy and sell opportunities. And I'm also going to tell you why this is the ultimate shortcut to becoming a more confident trader. So, with that being said, let's get into this.
So, here we are on the charts. The same charts that you're probably used to seeing, the same ones you grew up trading, the same ones you started trading with, and you're probably trading with right now. It looks really, honestly, confusing if you don't know what you're looking at. And even when you do know what you're looking at, this can still look confusing and mess with your psychology. The reason it messes with your psychology is because it shows you every single little price fluctuation. It shows you every little wick. It shows you every little small movement that does not matter in the overall trend. It just makes you second-guess literally every single thing you're doing before you enter a trade and while you're in trade.
But these right here are Heikin-Ashi candlesticks. And as you can see, it very much so smooths out price. It shows you the actual direction of the market. It tells you exactly what's going on without all the extra fluff and all the extra noise. And that's why Heikin-Ashi candlesticks are the best charts that you can use as a trader.
So, first of all, what are these? Why are they like this? What do they mean? How do we set them up? We're going to run through all of that. I'm also going to show you different candlestick patterns using Heikin-Ashi candlesticks that I've used to help me understand when price is about to start buying, when it's about to start selling, once when it's about to reverse, or it's about to consolidate.
But let's start from the beginning. How do we even get our charts to turn to Heikin-Ashi candlesticks? So here on the top of your TradingView chart, it's going to be the same no matter what platform you're on. Wherever you see your candles, whatever you see your chart that you're on, just hit the drop-down and you'll have a bunch of options. You have regular candles, which is what we're all used to. You can have a line chart. You can have a columns chart. You can have what I call tic-tac-toe charts. It won't let me put it on here. No. Where is it? Right here. You can have tic-tac-toe charts. You can have a bunch of different things. But the one that we care about is this right here. Heikin-Ashi candlesticks.
So once you actually switch to Heikin-Ashi candlesticks, you want to actually double-click them right here to open up their settings or go into settings, whatever platform you're using. And you actually want to make sure that this is unchecked on your chart. You do not want "Real prices on price scale" checked. And we'll get into the reason for that in a second. But we just want to make sure that that is unchecked. And let's just hit OK.
Now you see these candlesticks and they obviously look a little bit different than regular candlesticks. So let me break down exactly how to read these candlesticks. Tell you exactly what's going on and tell you the difference between these and regular candlesticks and honestly why they're much better.
So if we look at these, we can see that each and every candlestick starts the body of the candlestick actually starts in the middle of the body of the candlestick before it. So, for example, this candlestick right here, the next candlestick after it, which is this one, the body of the candlestick starts in the middle of this candlestick. Now, the reason they do this is because Heikin-Ashi candlesticks, as I've mentioned multiple times, is used to smooth out price. And they smooth out price by showing you the average of where price has been throughout this entire time frame. So, it works the same. We're on a one-minute chart right now, but it works the exact same that each of these candlesticks represent what price has done within one minute or five minutes, depending on whatever time frame you're on. 15 minute, 1 hour, 4 hour, it doesn't matter. It's still telling us that same price.
The wicks are also telling us the same thing. It's telling us where price has been throughout each of the candlesticks. We know with regular candlesticks that the wicks are just simply telling us, for example, on this candlestick right here, that price was all the way down here at one point. Price was up here at this point, but price ended up opening and closing where the body of the candlestick is showing us. On Heikin-Ashi candlesticks, it's a little bit different. The wicks still tell us that price went up here at one point, price went down here at one point, but the body of the candlestick, as you see, is the average of where price has been throughout this time period. So this candlestick right here, the body of it isn't telling us where price opened at and where price closed at. It's simply telling us the average. This top part right here on a bullish candlestick, which is a green candlestick, it's simply telling us that throughout this entire candlestick, the average of where price has been is right here, the top of this body. Then it's vice versa with bearish candlesticks, um, which are the red candlesticks. The bottom of the body is telling us the average of where price has been throughout this entire candlestick.
Now, that's extremely important and extremely valuable for a few reasons. So, you've probably seen a few times, depending what time of the day you're actually trading, that price could be chilling down here on a candlestick, right? For the entire, let's say on a one-minute candlestick, it could be chilling down here for the entire one minute and then one second before the new candlestick forms or this original candlestick ends, price can shoot all the way up here. And then to you, it prints that the candlestick closed all the way up here, which it did, but most of the time it was down here. It barely saw up here. And what that does is it tricks us into thinking that, okay, we're going super bullish right now because we assume that price has been in this area for a long amount of time when in reality, price was really chilling down here the entire time. Then the last two seconds it shot up here. So if you're a breakout trader or if you're someone that looks for your entries based off of candlestick patterns and what candlesticks look like, you get faked out a lot. Heikin-Ashi candlesticks cut that down a huge amount. And the reason being is because the candlesticks is actually showing us the average of where price has been. And if we know the average of where price has been is bullish, or the average of where price has been is above a breakout zone, or below a breakout zone, whatever it is that you're looking for, we can feel more confident knowing that, okay, this is actually a solid breakout, or this is actually a solid reversal because we've averaged above our breakout zone, or average above our entry criteria zone. That's one powerful thing when it comes to Heikin-Ashi.
Now, going back to what I said before about the settings that we want to make sure is unchecked here. The reason we want to do that is because we can see here in this example that the body, as I mentioned, is not where price currently is. As we can see right here, the body of the candlestick does not tell us where price actually is. So, we can't look at this candlestick and say, "Okay, right now price is right here." That's not the case. Price is actually down here where you see this second number at. Price is actually down here. If we go to regular candlesticks, you'll see price is actually down here. But on Heikin-Ashi candlesticks, because we're seeing the average of where price is, we need to be able to identify and see in real time where price actually is right now. That's why we want that setting unchecked. Cuz if I check this, you're going to see the second number disappear. And that's not what we want. We want to see the actual price of where price is actually at right now, as well as where it's averaging at. So this first number you're going to see here is where price is averaging at, and this is where price actually is right now. So that's why I mentioned it's important that we do turn that setting on.
Now I mentioned it's a bunch of different benefits for using Heikin-Ashi candlesticks. And one of them is when you're already in a trade, it allows you to be a lot less emotional. We know, let's say for example, we're in a sell right here, right? And price is selling to the downside and we're trying to hold it all the way till it gets down to this area. Us looking at regular candlesticks, we're going to see all these different fluctuations. We're going to see green candlesticks go up, green candlesticks go up, green candlesticks go up, and that's going against our trade and we're just going to get psyched out and make us close our trade out early, potentially losing out on a bunch of different profits. But if we switch over to Heikin-Ashi candlesticks and because Heikin-Ashi candlesticks smooth out the price and cut out all the noise, we can actually hold this trade confidently knowing that we're barely getting any green candlesticks that is going against us. We're still seeing the overall trend and the overall trend is going down. So we can feel more confident holding the trade. So that's another huge benefit of Heikin-Ashi candlesticks.
We can zoom out here and just go to regular candlesticks. I want you guys to see the difference. Look at, look at this trend to the upside here. How we see price trending to the upside here. But in this trend, we see all these different pullbacks, all these different wicks, all these different colors. This is a very stressful trade to hold. If we were trying to buy here and hold to the top, this is a very stressful trade to hold. Versus if we switch to Heikin-Ashi candlesticks, this is ultimately just showing us that we're overall going up. It's cutting out majority of the noise so we can feel confident holding this trade to our actual full take profit.
Once you start using Heikin-Ashi candlesticks and you see how smooth price looks, how easy it is to tell the direction that the market is going in, how easy it is to spot these real support or resistance zones using Heikin-Ashi candlesticks, you're never going to want to switch back. I personally draw my support and resistance zones only using Heikin-Ashi candlesticks because it shows me the actual support or resistance zones. It doesn't show me the fluff. For example, right, we know with support and resistance, we need to find zones that are that price is actually rejecting at. So price buys up here and price actually rejects at this point. This is a good resistance zone, right? But all going in this entire way to the up, we might have some small fluctuations like this, right? That are showing us a bunch of different noise before we get our ultimate rejection to the downside. With regular candlesticks, we might draw this zone right here as a support zone or a resistance zone and then when price taps it, we'll get faked out because that's not actually a zone. With Heikin-Ashi candlesticks, that's a lot less likely to happen.
For example, if we go to the hourly time frame right here, we can actually look very easily and see actual pivotal points that price is rejecting at. For example, right here, we see price is actually rejecting at this point. And what happened when price rejected off of there, or what happens when price taps back into that zone? We rejected off of it. Now, if we come over here to a higher time frame and go to regular candlesticks, a lot of times we can find zones that are not good support or resistance zones. For example, this zone right here, right? We see price sold down here and then price bought up right here. We did buy up here. We could mark this off and then when price tapped into it, let's say for example right here, when price tapped into it, we could have sold right here, put our stop loss above that zone that we had and tried to target down here. And as you would have seen, this is not a valid resistance zone. Price obviously ended up buying off of it, buying above it, and we would have lost the trade a few times actually if we entered multiple times. But if we were on Heikin-Ashi candlesticks, we would have avoided that and been able to see, okay, this was not a valid zone anyways because we didn't actually have a good pullback here. We had one candlestick pullback here at this area. So, this is not a zone that I would pay attention to.
So, with using Heikin-Ashi candlesticks, we're able to tell, okay, this is a real resistance zone, or this is a real resistance zone over here, right? We're able to see real support or resistance zones based on price showing us the actual pivotal points. We don't just want to see where price hesitated at. We want to see actual pivotal points where price rejected at and changed directions at. And Heikin-Ashi candlesticks allows us to do that a lot easier. And we can see this is an actual pivotal point. When price got to that area, it sold off. Another actual pivotal point when price got to that area right here, it sold off. All of these other small areas we would have got faked out from if we were using regular candlesticks. We would have got faked out right here thinking that this was an actual zone right here, but it's not. Price ended up breaking right through it. So, this is another reason why Heikin-Ashi candlesticks are just superior to using regular candlesticks. As I mentioned, when I'm marking up my zones every single morning, uh, live with my inner circle, I'm using Heikin-Ashi candlesticks because that shows me the real support and resistance zones that I should follow.
Now, speaking of my inner circle, if you don't know where my inner circle is, is where I trade live every single morning. You don't only get to see me trade live, but you get to see me break down the markets to see exactly why I entered each and every trade. You get to see every single entry that I take, every single exit that I take as well. And we have four other extremely profitable coaches inside the inner circle that send out all of their trades as well. We have a dedicated trading psychologist. We have essentially everything that I would have wanted when I first started off trading that would have allowed me to get to the point that I'm at right now a lot quicker. So, if you're somebody that's a serious trader or trying to become a serious trader, no matter if you're a beginner or you've already been trading for a little while, I highly suggest you check out my inner circle. I'll leave a link for inside the description down below. Keep in mind the spots are always full, so don't get discouraged. Just keep checking back. The spots are full because I obviously try and provide as much value as possible and obviously a lot of people want that. But as I mentioned, don't get discouraged. Just hit the link inside the description to try and get the opportunity to join my inner circle.
Now, I mentioned in the beginning of this video that there are a few different candlestick patterns that show up on the charts that allow for us to actually be able to tell what price is going to do next. Let's go through a couple examples of those. There are three main ones that I look for. I'm looking for either Doji candlesticks, which simply look just like this. Candlesticks that have long wicks on the top and the bottom and a skinny, small body. When I see this candlestick pattern show up using Heikin-Ashi candlesticks, this is a strong signal that price is about to reverse.
So, how do I use that on a day-to-day basis? Let's say this is my resistance zone that I want to catch sells off of. I'm not just going to enter a sell as soon as price taps into my zone. I'm going to wait for price to tap into my zone and then show me a Heikin-Ashi Doji candlestick like this. That tells me, okay, it not just tapped into my support or my resistance zone, but it's also giving me an indecision candlestick or a reversal candlestick like a Doji candlestick. So, this is a good opportunity for me to sell. You'll see multiple examples of this. You see, we're selling to the downside. We got a Doji candlestick and we started going up. You'll see some more examples over here. We were selling to the downside. We got a Doji candlestick, started going up. We were going up here. We got a Doji candlestick, started going down. We were going up. Doji candlestick, started going down. We're going up. Got a Doji candlestick, started going down. You're going to see this happen multiple times. And that's because using Heikin-Ashi candlesticks and waiting for these candlestick patterns, the Doji candlesticks, it's a clear sign of the market showing us or price showing us that it's about to reverse.
Now, the next candlesticks that I look for are depending on if I'm looking for buys or if I'm looking for sells. When I want to know if there's strong bullish momentum going in the direction, I look for big candlesticks that have small wicks on the top but large bodies with no wicks on the bottom. Having no wicks on the bottom signifies that there's a lot of buying pressure. There's a lot of buying volume. That's telling me that the market is overall bullish and it's not going to be slowing down anytime soon. So again, how do I use this in real practice? Let's say price taps into my support zone right down here, right? We sold down into it and let's say I wasn't confident with this Doji candlestick, so I didn't enter. What would give me the confidence to enter a trade or to continue to enter a trade if it's going in my direction is if I see a candlestick like this print with a big body with a small wick on the top and absolutely no wick on the bottom. That's showing me that there's a lot of bullish momentum moving away from my zone, which in turn gives me good confidence to actually enter the trade for a buy.
Vice versa with sells. If I'm looking for sells off a resistance zone, or sells outside of a breakout zone, or sells in any instance, I want to see a Doji candlestick that has a big body that has no wick on the top. That's showing me that there's an extreme amount of selling pressure and I can feel confident either holding this trade longer if I'm in sells, or actually entering my trade if I'm looking for sells off of, like I said, a resistance zone or out of a breakout level or things like that.
Now, speaking of breakouts, I've mentioned so many times that Heikin-Ashi candlesticks cut out all the foolishness. It cuts out all the unnecessary noise, but it also helps when you're trading breakouts because we're not just seeing price randomly break out of these breakout zones and giving us false entries causing us to get faked out. We are able to see that price is actually averaging outside of our breakout zones, which in turn helps us to take more confident and probable trades. So, for instance, let's look at this example right here. Let's say this is the low. This is your breakout area. And on regular candlesticks, you'd be looking for sells a break below here. And you probably would have got faked out right here because we broke out of here multiple times. But if you were on Heikin-Ashi candlesticks, you can see simply that price never got anywhere close to averaging outside of your breakout area. So you would have avoided entering this trade. And what ended up happening? Price ended up buying up and you would have lost the trade. But by using Heikin-Ashi candlesticks, you were able to stop yourself from entering this trade, seeing that the body of none of these candlesticks even got close to your breakout area, let alone close to closing below your breakout area.
Now, same thing vice versa with this one right here. Let's say we had a zone right up here. You would have got faked out right here thinking that this was the breakout. But if you were using Heikin-Ashi candlesticks, you can see that the body of the candlestick is nowhere close to that breakout area, which means that it has not averaged outside or even anywhere close to this breakout area. So if you had entered here because you were on regular candlesticks, you would have got faked out and you would have lost the trade. Versus if you had waited and then you see a candlestick like this where we have no wick on the bottom and price averaged and closed above our breakout area, which in turn gives us confidence to have entered the trade and as you see, we continue to have an actual breakout to the upside.
So as you can see, making this one simple easy change in switching to Heikin-Ashi candlesticks can drastically change the way you trade. Not just from not getting faked out as much, making it easier to find support or resistance zones, allowing you to hold your trades much longer and not have to stress about holding your trades because you're not getting faked out. Overall, it just gives you a much clearer way to follow the trend, which ultimately allows you to be more consistent with your trading.
Now, if you're thinking, okay, those Heikin-Ashi candlestick stuff is starting to make sense, but what is an actual strategy that I can use with Heikin-Ashi candlesticks? And that's exactly why I made this video right here. I break down my favorite strategy to use with trading Heikin-Ashi candlesticks called my HSS strategy. It works absolutely in sync with the candlesticks that we just went over. So in this video right here, it's a full guide to it. It's the honestly the best next step. So I'll see you right there.