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Trend Trading With Smoothed Heiken Ashi Candlesticks Forex System

A trend trading forex system composed of the Smoothed Heiken Ashi candlestick indicator and moving averages.

It works best on the 1 hour charts and higher time frames.

Chart Setup

Indicators: Heiken_Ashi_Smoothed,12 period exponential moving average, 50 period simple moving average
Preferred time frame(s): H1, H4, D1, W1
Trading sessions: Any
Preferred Currency pairs: GBP/USD, EUR/USD, NZD/USD, AUD/USD, USD/JPY, USD/CAD

Download

Download the Trend Trading With Smoothed Heiken Ashi Candlesticks Forex System.

Example: EUR/USD 1 Hour Chart

smoothed-heiken-ashi-forex-system

In this example, the EUR/USD allowed us to enter a buy and sell trade based on the simple trading rules.

The first short trade was closed for +70 pips (Sell Exit Strategy 1).

The second buy trade remains open (Buy Exit Strategy 1). Click the chart to enlarge.

Trading Rules

For long positions:

  • EMA 12 crosses SMA 50 from below
  • There’s a perceptible gap between the EMA 12 and SMA 50 (bullish trend)
  • Green Smoothed Heiken Ashi Candlestick appears on the chart

==> Initiate Buy trade.
Stop Loss: Place initial stop 5 pips below the SMA 50 line.
Buy Exit Strategy 1 : Exit the trade on the first RED Smoothed Heiken Ashi Candlestick.
Buy Exit Strategy 2 : Risk/Reward, ideally a minimum of 2:1 (i.e. risking 20 pips to make 40)

For short positions:

  • EMA 12 crosses SMA 50 from above
  • There’s a perceptible gap between the EMA 12 and SMA 50 (bearish trend)
  • Red Smoothed Heiken Ashi Candlestick appears on the chart

==> Initiate Sell trade.
Stop Loss: Place initial stop 5 pips above the SMA 50 line.
Sell Exit Strategy 1 : Exit the trade on the first GREEN Smoothed Heiken Ashi Candlestick.
Sell Exit Strategy 2 : Risk/Reward, ideally a minimum of 2:1 (i.e. risking 70 pips to make 140)

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