Heikin Ashi candles explained

Part 2 of 13 in Charts and indicators

Updated 24 October 2026 · यह गाइड हिन्दी में पढ़ें →

Heikin Ashi, Japanese for "average bar", is a way of drawing candles in which each candle is built from averages of the current and the previous one. The chart looks calmer than an ordinary candlestick chart: long runs of green candles in a rise, long runs of red in a fall, and fewer of the mixed colours that make a normal chart look busy.

That calm has a cost. A Heikin Ashi candle is not a record of what traded in that period. Its open and close are averages that no trade may have touched, and real turns show up on it late.

The formula

Each Heikin Ashi (HA) candle is built from the ordinary candle of the same period and the HA candle before it:

• HA close = (open + high + low + close) ÷ 4 of the ordinary candle.
• HA open = (previous HA open + previous HA close) ÷ 2. The very first candle uses (open + close) ÷ 2 of its ordinary candle.
• HA high = the highest of the ordinary high, the HA open and the HA close.
• HA low = the lowest of the ordinary low, the HA open and the HA close.

The HA open is the middle of the previous HA body, so every HA candle starts halfway up the one before it. That is where the smoothing comes from.

Worked example

Here are five days of Stock ABC (made-up prices) as ordinary candles:

And the Heikin Ashi candles from the same data:

Day 3 worked out: the HA close is (108 + 110 + 101 + 101) ÷ 4 = 420 ÷ 4 = ₹105. The HA open is the middle of day 2's HA body, (101.25 + 104.75) ÷ 2 = ₹103. The HA close is above the HA open, so the candle is green. The high and low stay the ordinary ₹110 and ₹101, since both HA values sit between them.

Now look at what that did. On day 3 the stock fell ₹7, from ₹108 to ₹101, and the HA chart shows a green candle. On day 4 it rose ₹6, from ₹101 to ₹107, and the HA chart shows a red one. The averages ran a day behind both moves.

Day 5 has no lower wick: its HA low of ₹103.75 is the same as its HA open. Heikin Ashi readers call a green candle with no lower wick a strong one. Here it only means that the HA open, an average of the past, sat below the day's real low of ₹106.

How traders read Heikin Ashi

• Colour runs: a string of green HA candles is read as a rise in progress and a string of red as a fall, which is the main reason people use the chart.
• Missing wicks: green candles without a lower wick, or red ones without an upper wick, are read as a strong move in that direction.
• Small bodies with wicks on both sides: read as indecision, much like a doji among ordinary candlestick patterns.

All three describe averages. The colour changes only after enough of a move has gone into the averages, so a Heikin Ashi chart shows a turn later than an ordinary chart does, every time.

What Heikin Ashi hides

• The real prices. The HA open and close are not prices anyone traded at. On day 3 the HA close is ₹105, while the stock closed at ₹101. Never read an order price, a stop-loss or a profit off an HA candle.
• Gaps. Every HA candle opens in the middle of the one before, so a gap up or down at the open does not show.
• Single-day moves. A sharp one-day fall can appear as a smaller green candle, as on day 3.
• Candlestick patterns. Patterns such as the hammer or the engulfing candle are defined on real opens and closes. On HA candles they mean something else, or nothing.

Charts also differ on the price they show on the side scale of a Heikin Ashi chart: some show the real last price, others the HA close. Check which one yours shows before you use any level from it.

Try it yourself

A spreadsheet is enough. Put the ordinary open, high, low and close in four columns, and work out the HA close, HA open, HA high and HA low in the next four, row by row, with the formulas above. Type in the five days from this page as a test: you should get the same HA numbers.

The risk side

Heikin Ashi charts are popular with short-term traders, and short-term trading is hard. SEBI's studies (SEBI study, 2023 and 2025) found that about 9 in 10 individual F&O traders lost money in FY22 and FY25. Smoother candles do not change those odds. If you trade, set your stop-loss and position size before you enter, and count the charges.

Questions people ask

Is Heikin Ashi better than normal candles?

Neither is better. Heikin Ashi candles are smoother and make runs easier to see; ordinary candles show the real prices and show turns as they happen. Many traders look at both.

Are Heikin Ashi prices real?

Only the high and the low can be real prices. The HA open and close are averages, so they are usually not prices anyone traded at.

Does Heikin Ashi repaint?

A finished HA candle does not change. Each HA open depends on the one before, though, so two charts that start on different days can show slightly different values at first; the difference fades within a few candles.

Can I use Heikin Ashi for intraday trading?

It can be drawn on any timeframe, intraday included. The same limits apply: its open and close are averages, and it shows turns later than ordinary candles.

Sources

• TradingView: Understanding Heikin Ashi charts
• SEBI (Securities and Exchange Board of India)

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