Interpreting the Wicks

This video explains how to use predict trend changes from the presence and location of the wicks.

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That is an interesting approach. It seems to be more of a sentiment/momentum indicator and lags quite a bit. So it would need to thoughtfully used. It looks like they use it mainly for breakdowns and that could be its best value. But I think that combining it with other indicators could result in some interesting strategies.

I do like the idea of mitigating a lot of the noise with it. I am going to look at it more.

"I think that combining it with other indicators could result in some interesting strategies. "

jhawk,

Totally agree. That’s why I include the SAR indicator and TSI with my version of HA Smoothed.

Arindam

I think it needs to be stressed, since there has been so much discussion about smoothed HA charts, moving average smoothing of the Heikin-Ashi candles (single or double), alters the wicks and candle bodies. The same rules as in the video to look for wick and candle changes can apply to smoothed candles, but often aren’t as apparent or are even may be completely obliterated. Doji’s form more easily and wicks are often persistent. Just be aware of what you are using.

In a somewhat similar vein, Dan Valcu has created an indicator he refers to as haDelta which charts the differences in candle bodies to create signals. Thinkorswim uses the formula listed as HeikinAshiDiff as well as you can find it in Tradeview and a few other platforms. But to be honest, using standard HA candles, you can visually screen just as easy in my opinion. However, the indicator can be used with regular candles to give you both perspectives or use the indicator results as a scan to screen for. I am unable to post any references or more specific data at this moment as I am out of town taking care of grandkids for a week and only have bare-bones access to my files, sorry.

For the record, there is another HA based indicator, more for longterm trades created by Sylvian Vervoort he refers to as HACOLT (HeikinAshi Candle Oscillator LongTerm). It’s from several serial articles in Technical Analysis of Stocks & Commodities magazine. If you want more specific references, let me know and I’ll try to get them posted in 10-14 days. Sorry, family duty takes priority.

Lakedog

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Lakedog,

No need to apologize for not providing more info on HA variants. In these days of having access to internet search-engines, providing such search-engines with just a name brings up hits and links that can be followed for full explanation. So, consider your job done of bringing those indicators to the forum members’ attentions and enjoy your time with your grandkids. As for the usefulness of such variants, I’ll leave it to others to decide for themselves and refrain from my usual skepticism. Or, maybe I won’t. LOL

There was a time not that many decades ago when I was poor enough that everything I owned could fit in a VW, and a SuperBeetle at that, not van. Nor have I forgotten my years of struggling to make enough sense of markets that I could pull more money out of them than I brought to them. So my concern --always-- is the needs of a beginning investor with small money, small time, and small skills who, nonetheless, has to make sense of markets or else lack sufficient assets to ever retire (not that “retiring” isn’t overrated).

In these “modern” days we live in, with zero commissions on trading, easy and free access to more financial and economic info than any person needs or could make use of, and with every broker and financial website offering dozens of articles tipping stocks and other investment vehicles, what I’d argue that our beginning investor needs are three things: #1, a means to tell at glance whether a stock tip is timely. #2, a means to know when to get out of currently open positions. #3, a means to know how to size positions in the first place so they are appropriate to one’s account size and tolerance for uncertainty.

From what I can tell so far, what Quill and I have been kicking back and forth and calling ‘HA Smoothie’ does a good job of timing investments. Not a perfect job, because such a thing doesn’t and can’t exist due to what markets are, i.e., complex, quasi-chaotic, social interactions. But ‘HA Smoothie’ removes a lot of noise from the signal, maybe enough that even a beginner could use its rules to make a few bucks for her or himself. And if it’s beginners for whom HA Smoothie is intended, then complications like HADiff, HAColt, etc. have to be eschewed. (IMHO, 'natch) In short, KISS. (Keep It Super Simple.)

Again, don’t regret your time away from a computer. Time with family is more important.

Arindam

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My mentioning of other indicators. is not an endorsement of them. I just feel you need to be aware of what is out there. I don’t use them. Actually, a couple years ago I came up with an indicator reflecting wick size changes in HA candles to help predict impending changes but in reality, looking at the candles size, wicks in a regular Heikin Ashi candle was more informative. The indicator only mathematically confirmed the obvious. So why bother.

I support KISS, but that’s my point on smoothies. Normal HA candles with attention to changes in wicks, candle size really tells most of it. I’ve mentioned that in at least one other thread. Smoothed candles ease the trend but can hide the actual price action. Life is full of double edge swords.

Lakedog

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Lakedog,

You wrote, " Smoothed candles ease the trend, but can hide the actual price action."

That isn’t exactly what you wrote. (I threw in a comma before the conjuction.) But here’s how I’d rephrase it.

“Smoothed candles [can] ease the [identification of] the trend, [because they] hide the actual price.”

If interpreting candlesticks --and their patterns-- based on actual prices were easy and obvious, then everyone would be doing it if their intention were to make short-term, 1 to 10 day trades based on buyer-seller interaction. That, as you should know, is the intended and historical scope of Candle Patten Analysis (CPA). But few know how to do proper CPA, nor do they want to learn it from books written by Steve Nissan and --more effectively-- by Greg Morris and others. That kind of close tape-reading takes more effort and practice to learn than most are willing to make.

But even a kid can point out the the trends in a time-price series when that series in formatted with HA bars. Throw a confirming momentum indcator like TSI and a what amounts to a trailing stop --i.e., the SAR indicator-- and our would-be beginner is handed a ‘Red-light/Green light’, ‘Go/No-go’ system that he/she should be able to learn how to use with five minutes of instruction that captures the major profit opportunities and keeps them out of situations they shouldn’t be getting themselves into.

Thus, to state the obvious, ‘HA Smoothie’ is just an indicator. But it’s also close enough to actual prices that if a would-be user stuck with market orders executed at the following day’s open to get in/out, he/she would never need to refer to charts built on actual prices.

Arindam

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