<div class="text-justify">Hello professor @reddileep,
It’s another week of this season CryptoAcademy, this weeks lecture was all about **Heikin-Ashi Trading Strategy**. And I must say our professor did a great job in handling this topic. After reading the lecture notes and doing research and enquirers I present my assignment post this weeks task.
#### Q1
**Define Heikin-Ashi Technique in your own words.**
According to my research I found out that this technique was designed by Munehisa Homma in the early 17’s, however in the crypto space they were other techniques traders used to determine strong and weak trends some of them include candlestick chart, Renko, Heiken-Ashi and the Japanese candle stick.
The heikin- ashi is quite different from techniques like the Japanese candle stick because we know that in the Japanese candle stick the is no relationship between the candles this means that the previous candle doesn’t use any data from the other candle.
Heikin-Ashi Technique, when translated means Average bar Technique with this type of technique the is a relationship between the candle stick because it relies on data ( the previous high, low and closing price ) of the asset in other to form the next candle stick
We all know how volatile the crypto space is that is the price of an asset can be $6 within seconds it can either go higher or lower. The prices changes almost all the time this is termed as noise in the crypto market space. When this happens it is very difficult to clearly see the trend of asset whether it’s going in an upper trend or in a down trend. This make analysis and prediction of an asset very hard.
The Heikin-Ashi Technique uses data from the average of the previous high, low and closing price this helps traders to clearly determine the trends of the assets without been confused with the ‘noise’
#### a chart of cardano/ tether showing the Heikin-Ashi Technique
#### Q2
**Make your own research and differentiate between the traditional candlestick chart and the Heikin-Ashi chart. (Screenshots required from both chart patterns)**
For this task I will be using the cardano/usd pair to illustrate the traditional candle stick chart and the Heikin-Ashi chart.
#### a chart of cardano/ tether showing the Heikin-Ashi Technique
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#### a chart of cardano/ tether showing the traditional candlestick chart.
Heikin-Ashi Candlestick | Traditional Candlestick
--------- | ----------
Like I said earlier it helps traders see the clear trend by removing the noise in the market | This technique doesn’t remove the noise in the market it however follows the price of the asset.
Traders can easily identify the trend lines | the trend lines are very hard to find
This technique doesn’t use the current asset price it rather takes the average | This technique uses the current price of the asset
The is a relationship between the previous candles | The is no relationship between the previous candles
The color of the candles remain the same until the is a change in the trend of the asset | the color changes depending on the price of the asset.
#### Q3
**Explain the Heikin-Ashi Formula. (In addition to simply stating the formula, you should provide a clear explanation about the calculation)**
To be able to calculate Heikin-Ashi Formula, you will need to find these values **open, close, high, and close.**
##### 1. Calculating the open of the candle
To calculate the open of a candle you will need to sum the the opening previous candle stick and the closing price of the same candle stick and divide by 2. Which can be mathematically written as
#### P = (PO + Cp)/2 ;where CP = closing price and PO = previous open
### 2. Close of the candle
To calculate the close of the candle you will need to add the current open, current high, current low, and close price of the candle stick and divide by 4 this can be mathematically written as
##### C = (CO + CH + CL +CP)/4 ; where CO = current open, CH = current high, CL = current low and CP = close price
### 3. High of the candle
From the list of High, Open, Close You select the biggest number. This can mathematically written as
##### H = Max of (High, Open, Close) of the candle
- - -
### 4. Low of the candle
From the list of High, Open, Close You select the lowest number. This can mathematically written as
##### L = Min of (High, Open, Close) of the candle
- - - -
<sub><center>[Summary of what I just wrote](https://www.investopedia.com/terms/h/heikinashi.asp)</center></sub>
### Q4
**Graphically explain trends and buying opportunities through Heikin-Ashi Candles. (Screenshots required)**
In the crypto market space there are basically two major types of trends you will see that is the uptrend (bullish trend) and the downtrend (bearish trend ). Let me explain each trend and better your understanding even further with screenshots.
#### Uptrend ( Bullish trend)
This is usually when lots of traders and investors jump into an asset causing the price of the asset to sky rocket that is the price is in a continuous rise. That’s when traders make a lot of profit. Heikin-Ashi Candles Clearly show these trend because doesn’t react to the current price of the asset but rather the average of the previous candle stick.
#### Downtrend ( Bearish trend)
This is when most traders after making the profits from the bullish trend decided to opt out of the trading causing the price of the assets to be in a continuous decline (dropping of the price of the asset ) this trend again is easily spotted using the Heikin-Ashi technique.
Heikin-Ashi Technique is a good technique in determining the buying opportunities because it filters the the noise in the market. Giving the traders a clear view of how the asset is doing whether it’s in the bullish season or the bearish season hence helps the reader know when to buy his asset.
### Q5
**Is it possible to transact only with signals received using the Heikin-Ashi Technique? Explain the reasons for your answer.**
Yes!, because the main aim of this technique is to filter the crypto market space from noise and clearly show the trends of an asset so with this I think the trader can be able to clearly identify when to sell and when to buy an asset.
But when you read the lecture notes provided by our professor mostly those who educate us on indicators and techniques they tell us that using one indicator or technique to make your decision is not advisable. Because some indicators and techniques can not identify weak trends or fake breakouts hence when you use only them you might run at a loss
### Q6
**By using a Demo account, perform both Buy and Sell orders using Heikin-Ashi+ 55 EMA+21 EMA**
#### Buy trade using cardano/tether
I will be using the 55 EMA and 21 EMA to determine or confirm from the Heikin - Ashi technique to determine the right to buy my cardano. First I have to add the indicator into my chart.
After adding the indicator, I saw that the indicator moved below the asset (this means that the price of the asset will rise) hence the right time to buy and make money. I placed my buy order of 1 cardano
##### Buy order
- - - -
### Sell order
I will be using the 55 EMA and 21 EMA to determine or confirm from the Heikin - Ashi technique to determine the sell my cardano. First I have to add the indicator into my chart.
After adding the indicator, I saw that the indicator moved above the asset (this means that the price of the asset will fall) hence the right time to sell and avoid loss. I placed my sell order of 1 cardano
##### sell order
### <center>Conclusion</center>
I must say this has been an informative lecture I have indeed learnt a lot. The Heikin-Ashi Technique is a very good technique because it gives the trader a clearer view of the chart allowing him to make the best decisions when it comes to trading because Heikin-Ashi Technique filters the noise in the market.
And also the Heikin-Ashi Technique can be used by traders to know the right time to buy and asset and also know the right time to sell an asset however for best results it is good you add indicators like the EMA to confirm before you make any decisions.
##### please note that all screenshot are From [TradingView](https://www.tradingview.com/chart/?symbol=BITSTAMP%3ABTCUSD)
#### Thank you.
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