Candlestick or Heikin Ashi


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In this tutorial, I will explore the main differences between the standard candlestick chart and the Japanese trading indicator Heikin-Ashi. I will then demonstrate how to create both of these charts with Highchart Stock.
The demo below displays the same AAPL stocks using a candlestick chart (graph on top) and a Heikin-Ashi indicator (graph on bottom):
 

 
Even though the graphs look similar, there are some fundamental differences. Let’s start with the candlestick charts:

  1. The candlestick chart shows raw information, where each candle is detached from the previous candle, and has its own price information; such as open, high, low, and close.
  2. The candlestick chart exhibits more volatility than Heikin-Ashi as all the data is displayed.
  3. No time gap is required as all the candles are independent of each other.

Heikin-Ashi is a Japanese word that translates to the “average pace” in English. The Heikin-Ashi chart is based on candlesticks; however, it has the following differences to the standard candlestick chart:

  1. Each candle is built upon the previous candle as it is processed (averaged depending on the previous candle data.
  2. Candles in Heikin-Ashi are much smoother than those in the candlestick chart and also have less noise that helps to detect clearer patterns, as the data represents the average price.
  3. Heikin-Ashi charts are easy to read and highlight market trends.
  4. For the long-term investor, Heikin-Ashi is an excellent tool to spot trends.

To summarize, the standard candlestick chart offers real-time, unprocessed, and noisy information, whereas Heikin-Ashi performs data filtering and processing with a time gap. The next logical question is which one to choose? Well, it depends; if you are looking for raw and granular information with all the patterns, go for the normal candlestick chart. However, if you are looking specifically to spot trends and prefer a smooth price and low noise, then Heikin-Ashi is the right chart for you.

Now, you know the main differences between the candlestick chart and the Heikin-Ashi chart; let’s see how you can create them with Highcharts Stock.

How to create a candlestick with Highcharts Stock?

It is easy to create a candlestick with Highcharts stock; all you have to do is:

  1. Add the highstock.js module
    <script src="https://code.highcharts.com/stock/highstock.js"></script>
  2. Select the candlestick chart type type: 'candlestick'

How to create a Heikin-Ashi with Highcharts stock?

It is also simple and straightforward to create a Heikin-Ashi charts:

  1. Add the highstock.js module
    <script src="https://code.highcharts.com/stock/highstock.js"></script>
  2. Add the heikinashi.js module
    <script src="https://code.highcharts.com/stock/modules/heikinashi.js"></script>
  3. Select the candlestick chart type type: 'candlestick'

In this article, I share my list of the main differences. Let me know your list, and feel free to share your thoughts in the comment section below.

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