Hikin Ashi is a very useful candle type that is very popular among new traders. It was made by Munehisa Homma in the 1700s, so it’s really old. Hikin Ashi means “average bar” in Japanese. You can tell by the name, that the Hikin Ashi averages price data, to create candles that appear smoother than the normal Candlesticks. Hikin Ashi candles filter out market noise. Less market noise will help you spot the trend and reversals easily.

On Trading View, this is what the Hikin Ashi candles look like. If we compare it with the normal candlesticks, we will see how smoother and cleaner the price action looks with the Hikin Ashi candles. Candles on the Normal Candlestick chart change direction frequently, but that’s not the case with Hikin-Ashi. That’s because Hikin Ashi averages price data. Hikin Ashi can be very useful for new traders to find the direction and strength of a trend.

And finding the Direction and strength of the trend is very easy with these candles.
If a Hikin Ashi candle has no lower shadow, it indicates a strong uptrend.
Furthermore, If a Hikin Ashi candle is green in color, it indicates an uptrend.
Size of the candles also matter. If the green candle is bigger in size relative to the other candles, it indicates a strong uptrend. And if the green candle is smaller in size, it indicates a weak uptrend.

And if a Hikin Ashi candle has no higher shadow, it indicates a strong downtrend.
Furthermore, If a Hikin Ashi candle is red in color, it indicates a downtrend.
Like I said, Size of the candles also matter. If the red candle is bigger in size, it indicates a strong downtrend. And if the red candle is smaller in size, it indicates a weak downtrend.
Sounds easy right?
What if the candle has shadows above and below at the same time? If a Hikin Ashi has shadows above and below at the same time, it indicates an indecision or range market.
After a series of green Hikin Ashi candles, if you see a candle that has shadows on both sides, it indicates an indecision.
Similarly, After a series of red Hikin Ashi candles, if you see a candle that has shadows on both sides, it indicates an indecision or range market.

Now there are different strategies around Hikin Ashi candles alone. The basic Hikin Ashi strategy, is to buy when the Hikin Ashi gives a strong uptrend indication after a series of red candles, and sell when it gives the strong sell indication after a series of green candles. Any trader with a little bit of experience can tell, that this kind of strategy alone can’t produce profit in the long run. If you buy and sell every entry signals, there is a high chance that you will blow up your account eventually. If you don’t buy and sell at every color change of the normal candlestick, why would you enter trades at every color change of the Hikin Ashi candles.

The best use of Hikin Ashi is at the support and resistance levels. You can also use it with indicators that you know work.

That’s all.

Now you know how to use the Hikin Ashi candles properly, and the reasons why most people use normal candlesticks.

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