If you’re looking to up your trading game, you’ve probably heard of the Heiken Ashi indicator. It's a staple among traders, but have you tried the smoothed version? Let’s dive into what makes this variation a must-have in your trading toolkit.
The smoothed Heiken Ashi takes the classic approach and enhances it by using filtered prices. Here’s the scoop:
- Rather than relying on “raw” prices for its calculations, it employs smoothed, filtered, and averaged prices. This tweak helps in cutting out some of those pesky false signals, making it much more user-friendly.
- This version allows you to pick from four basic types of averages for that smoothing effect:
- Simple Moving Average (SMA)
- Exponential Moving Average (EMA)
- Smoothed Moving Average (SMMA)
- Linear Weighted Moving Average (LWMA)
- You can also set a “step” filter (in pips) to ignore minor value changes that fall below your chosen threshold. If you set the step to <=0, this filter is essentially turned off.
- And here’s the kicker: unlike the standard Heiken Ashi, this version only shows two values: +1 for an upward trend and -1 for a downward trend. This simplicity makes it particularly appealing for expert traders.
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