Heikin-Ashi — the Smoothed Lie (and When to Use It)

What it is

Heikin-Ashi ("average bar") candles don't plot raw prices: each bar's open is the MIDPOINT of the previous HA bar, and the close is the average of the period's O/H/L/C. The result is a smoothed series that filters noise — trends show as clean runs of same-color candles with no lower wicks (uptrend) or upper wicks (downtrend).

What it is great for

Riding trends: HA removes most of the scary counter-wicks that shake you out of a healthy trend. A trail rule like "exit when an HA candle closes with a body against the trend" keeps you in trends longer than raw-candle noise would.

The dangerous lie

HA prices are AVERAGES — they are not real traded prices. You cannot place stops or read exact levels off an HA chart: the "price" it shows never traded. Also, reversals appear 1 bar late (smoothing cuts both ways). Rule: analyze trends on HA, but execute entries/stops on RAW candles. Mixing the two up causes real money losses.

Sources

• Heikin-Ashi TechniqueInvestopedia
• When to use which chart typeTradingView education