Understanding this ancient method of candlestick charting can certainly reap dividends for your trading.
Trading Mistakes:
I’ve noticed with both new and old traders alike, the propensity for them to cut out of trades far too early and regret their actions as they see the trade move in the direction they first sort to a much bigger degree. The reverse can also be said for setting stop limits and pulling them too tight and again being forced out of a potentially winning trade unnecessarily.
Of course, that is what makes trading fun and also very difficult Pareto’s 80/20 rule is very relevant here. I believe trading is 80% psychological, using the other 20% to store your trading knowledge and skills.
Trading is 80% Psychological
Having a clearly defined trading plan and strategy would aid this process but I have noticed whilst teaching and mentoring many of my students that they simply like to tinker.
They struggle with the psychological movement of the price of any given asset and get too absorbed in the now and become clouded when trying to decipher the current trend: adjusting stop losses, pulling in limit orders, and making irrational decisions.
So even with the best-laid plans, the actual trade can go horribly wrong.
So you may now be asking: “What has this got to do with Japanese Candlestick charting methods” Quite simply, I introduce traders I see having these issues to the world of Heikin Ashi candles as a method of smoothing out some of the noise that impacts their decision-making processes - it makes them more 'robust' and 'disciplined' traders.
Heikin Ashi candles I use quite considerably in my own trading and technical analysis. They are also a fantastic charting method for creating highly effective, automatable trading strategies, which can be adapted to many trading styles: swing, trend, scalping, etc and work across all trading timeframes. So what are they and how can they be used to better your trading you can find out within the course.
In Summary