Heiken Ashi

with
Vladimir's Touch
October 2010

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Dear trader,

During a conversation with my good trader friend Jason Sweezey, he

shared with me a great indicator that he came across on the net.

Please find the indicator inside the file you downloaded, together with
this ebook. It is called: HAMA.mq4.

Close your MetaTrader 4 platform, copy the HAMA.mq4 file into the
indicators folder of MetaTrader, which is usually located at:

C:\Program Files\Metatrader folder\experts\indicators

Then, re-open MetaTrader and you'll find the HAMA indicator in the
Custom Indicators list.

The indicator itself is free. However, just putting it on a chart is not

enough – at least not for me!

I find this indicator very powerful if used the right way, so this is what
I'm here for today.

The indicator is based on Heiken Ashi principles.

For those who are not familiar with Heiken Ashi here is some general
information:

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 What Does Heikin-Ashi Technique Mean?

A type of candlestick chart that shares many characteristics with

standard candlestick charts, but differs because of the values used to
create each bar. Instead of using the open-high-low-close (OHLC)
bars like standard candlestick charts, the Heikin-Ashi technique uses a
modified formula:

Close = (Open+High+Low+Close)/4
Open = [Open (previous bar) + Close (previous bar)]/2
High = Max (High,Open,Close)
Low = Min (Low,Open, Close)

Investopedia explains Heikin-Ashi Technique:

The Heikin-Ashi technique is used by technical traders to identify a
given trend more easily. Hollow candles with no lower shadows are
used to signal a strong uptrend, while filled candles with no higher
shadow are used to identify a strong downtrend.

This technique should be used in combination with standard

candlestick charts or other indicators to provide a technical trader the
information needed to make a profitable trade
(Taken from www.investorpedia.com)

So I started looking into this free indicator and to be honest I was quite
impressed. Of course it is something that can't be used alone, and should
be coupled with an appropriate strategy, but it can supply powerful
confirmations when you are not sure about a trade.

So in this e-book I'd like to share with you a little explanation about the
indicator, and some ways to add that special touch that will turn it into a
winner.

First of all, this is what the indicator presents:

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There are red bars and there are blue bars. The red ones represent a
bearish market, and the blue ones a bullish market.

As you can see, you can use this information alone to support your
market analysis, but you can do much more than that…

Take a look:

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When the bars are big, it means that the trend is strong and powerful.

When the bars are small it means that the trend is weak and it's better to
stay out.

Ok and now let's go straight to the various ways to use the indicator:

Strategy #1 - Trend when direction turns

What does it mean?

It means when we ride a trend and the market changes its direction, we
want to trade with the new direction.

For Example:

When we have strong & long trend and then the market changes the
direction and price closes above\below the trend, we enter the trade.

At trade 1 we got a blue trend, and a close below this trend gave us an
entry to sell.

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At trade 2 we got a red trend and a close above, so it is a buy signal.
Before this entry we get a false buy entry signal.

At trade 3 we got a close above red trend and it is a buy signal.

BUT, my friend, I would strongly NOT recommend using it as a

standalone strategy. Just combine it with your regular trading strategies
and let it serve as an extra confirmation.

Strategy #2 - Trend after a false signal

In the previous strategy we traded after the market changed its direction.
But we saw an example of a false signal.

In strategy #2 we'll enter exactly after such a false signal, in the current
market direction.

Examples:

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Strategy #3 – Join when support or resistance line is broken

Another possible strategy with this indicator is to trade with the trend and
join the trend when support\resistance line is broken.

For example, we are in a blue trend (up trend) and we have a break of a
powerful resistance.

Same idea with a support line:

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These are 3 ways that I find good to trade with and make some profits.

BUT, my friend, PLEASE don't use any of these strategies by themselves

- combine them with other strategies you know, with technical tools you
already have some confidence in.

Using Heiken Ashi bars is an extra powerful confirmation but not a

trading strategy by itself.

Use it right, get confirmations with this free fantastic tool, and enjoy the
fantastic profits that the market supplies.

Thank you for your time,

Good luck!

Vladimir Ribakov

www.vladimirribakov.com

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