Heikin-Ashi question:

Questions about MultiCharts and user contributed studies.
User avatar
MAtricks
Posts: 789
Joined: 09 Apr 2012
Has thanked: 286 times
Been thanked: 277 times

Heikin-Ashi question:

Postby MAtricks » 28 Jan 2013

I'm curious about how MC provides Heikin-Ashi candles. It looks like the calculation is correct, but why is the price different than the live market? This makes these charts unusable, correct?

Also, has anyone attempted to test anything automated on these charts? Since the close is not the close, the open is not the open, and the current price isn't the current price... I'm confused as to how anyone uses these.

The literature on these candles is located here: https://www.multicharts.com/trading-soft ... eikin-Ashi

Here are a few quotes from the page that seem to contradict themselves:

"-Auto trading orders on Heikin-Ashi Chart Type-
There are some differences between Regular and Heikin-Ashi chart types with regards to order generation in real time and backtesting."

"-Backtesting and Data Playback-
There is no difference between order generation on Regular and Heikin-Ashi chart types with regards to Backtesting and Data Playback."

"-Auto Trading-
There is no difference between order generation on Regular and Heikin-Ashi chart types with regards to Auto Trading."

This all came to me because a friend sent me a nice looking back-test of a fairly simple strategy on these bars and asked me to evaluate it. The back-test looks too good to be true so obviously there must be something wrong. I made sure that the strategy traded on the close of the bar which would make sense to me and then I watched the HA candles in real time.

SUPER
Posts: 622
Joined: 03 Mar 2007
Has thanked: 99 times
Been thanked: 80 times

Re: Heikin-Ashi question:

Postby SUPER » 29 Jan 2013

This describes the right way to use Heikin-Ashi, you can never substitue them for regular bars in trading.

viewtopic.php?f=1&t=11675&p=57468&hilit=heikin+ashi#p57468
These users thanked the author SUPER for the post:
Andrew MultiCharts

User avatar
Andrew MultiCharts
Posts: 1587
Joined: 11 Oct 2011
Has thanked: 931 times
Been thanked: 557 times

Re: Heikin-Ashi question:

Postby Andrew MultiCharts » 29 Jan 2013

Hello MAtricks,

The Heikin-Ashi chart type is constructed this way:

instead of using the open-high-low-close (OHLC) bars like standard candlestick charts, the Heikin-Ashi technique uses a modified formula:
Open = [Open (previous bar) + Close (previous bar)]/2
High = Max (High, Open, Close)
Low = Min (Low, Open, Close)
Close = (Open+High+Low+Close)/4

User avatar
MAtricks
Posts: 789
Joined: 09 Apr 2012
Has thanked: 286 times
Been thanked: 277 times

Re: Heikin-Ashi question:

Postby MAtricks » 29 Jan 2013

Andrew, thanks for the reply.

I understand the calculation behind the HA candles. The math is correct.

My question is: How is this usable and is anyone using them? The https://www.multicharts.com/trading-soft ... eikin-Ashi link says "There is no difference between order generation on Regular and Heikin-Ashi chart types with regards to Auto Trading." and I guess I'm curious as to how this is possible.

When nothing about the bar is showing a real price, what's the point of having them?

User avatar
Andrew MultiCharts
Posts: 1587
Joined: 11 Oct 2011
Has thanked: 931 times
Been thanked: 557 times

Re: Heikin-Ashi question:

Postby Andrew MultiCharts » 30 Jan 2013

MAtricks wrote:The https://www.multicharts.com/trading-soft ... eikin-Ashi link says "There is no difference between order generation on Regular and Heikin-Ashi chart types with regards to Auto Trading." and I guess I'm curious as to how this is possible.

The similarity of order generation and in general script calculation between regular chart and HA charts means:
  1. Auto trading and forward testing, no IOG = script is recalculated once per bar, on its close.
  2. Auto trading and forward testing, IOG is on = script is recalculated with every new tick.
  3. Backtesting, no IOG, no BM = script is recalculated once per bar, on its close.
  4. Backtesting, IOG is on, no BM = script is recalculated several times per bar.
  5. Backtesting, IOG is on, BM is on = script is recalculated on every tick/bar of detailed series (BM).
More details on strategy calculation can be fond here.
Take into account that i am talking about methods of strategy calculation, though they are the same as for regular chart, script uses prices of HA chart, that are different from regular chart prices.
MAtricks wrote:When nothing about the bar is showing a real price, what's the point of having them?

Reasonable question, but i believe it should be answered by traders. :-)


Return to “MultiCharts”