The Heikin-Ashi chart is a candlestick type of chart with some unique characteristics for Forex Trading. A Heikin-Ashi chart uses a unique way of plotting each bar as you can see in the EURUSD chart below.
Here are some advantages when trading using the Heikin-Ashi charts:
(1) The Heikin-Ashi charts make the candlesticks and trends to be easy identified
(2) Heikin-Ashi Candlesticks appear smoother and can filter the misleading market noise
(3) Heikin-Ashi Candlesticks can foreshadow trend reversals and quickly identify classic patterns
(3) Using the Heikin-Ashi Chart traders may identify trendlines, support and resistance, retracements etc
(4) Momentum oscillators and Volume indicators can be combined with the Heikin-Ashi Chart as with any other chart type
(5) There are no price gaps on a Heikin-Ashi chart
This is how the Heikin-Ashi chart plots its bars:
◙ Closing Price = Current Bar ( Open + High + Low + Close ) / 4
◙ Opening Price = Previous Bar [ (Open Bar) + Close) ] / 2
◙ High Price = Max Current Bar ( High, Open, Close )
◙ Low Price = Min Current Bar ( Low, Open, Close )
A Range Charts is also known as a Range Bar and it is a type of chart that is entirely based on a range of pip movement.
A Range chart is a type of chart that is entirely based on a range of pip movement and not in time. That means that a bar is plotted only if a pre-specified range of pips is achieved no matter if that range is achieved in a few minutes or in a few hours. That price movement is calculated between the high and the low and each bar is closing either at high or low.
The Range Charts were developed in themid-90ss by Vicente M. Nicolellis, a Brazilian trader.
Range charts eliminate the factor of time
A Range chart bar will always close at a high or at a low
A Range chart bar has the same price increment
Range Charts are able to eliminate the annoying market noise
Range charts plot more bars during active market hours and a few bars during non-active market hours
Range charts become more active in high-volatility days and less active in low-volatility days
Range charts are ideal for analyzing trending markets
Forex traders usually set ranges between 5 and 25 ticks.
◙ Short-Terms: 5 ticks, 10 ticks, and 12 ticks
◙ Long-Term: 20 ticks and 25 ticks
Renko Price Chart
The Renko Chart is a type of chart that plots only selected pip-movements by eliminating the impact of time.
Renko comes from the Japanese word Renga which means brick. This type of charts is valuable for Swing Trend-Traders and Long Trend-Traders but not for common Day-Traders. The Renko Chart plots only selected pip-movements by eliminating the impact of time.
Any price level plotted on a Renko Chart is based on a minimum pre-specified pip movement no matter the time.
The smaller the pip size, the more movements will be shown on a Renko Chart. On the other hand the larger the selected pip size the less movement will be shown.
◙ Usually, Forex Traders use ‘bricks’ between 3 and 16 pips but others may use bricks even 100 pips
◙ Stock Traders use usually ‘bricks’ that count 1.0% of the price of the stock
These are the main features of Renko Charts:
(1) Renko Charts are similar to Range Charts and are used for the early identification of changes in the general market sentiment
(2) A Renko Chart updates tick by tick
(3) Renko Charts are used for the elimination of the market noise by excluding minimum price changes
(4) A Renko Chart bar can be opened and closes in 1 hour or in 5 minutes
(5) Traders can select the minimum size of the pip movement that it will be shown on the chart
(6) More bars are plotted during high-volatility days and fewer bars during low-volatility days
A Tick chart is a type of chart that is based on trading volumes and a pre-specified amount of transaction (incoming ticks) and not in time. Actually, using a tick chart traders may completely eliminate the time factor and focus entirely on the real Price Action via the executed transactions. For example, a chart which forms a bar every 34 transactions is called a 34-tick chart.
These are some of the main features of the Tick Charts:
(1) Tick-Charts can correlate price action and market volume
(2) Tick charts can completely eliminate the factor of time
(3) Tick charts are more volume based than they are price based
(4) Tick Charts are forming a few candles during non-active hours and many candles during high-activity hours
(5) Traders can easy identify strong trends or upcoming reversals
(6) Traders can read a Tick Chart like a candlestick chart
(7) Tick Charts are ideal for scalping volatile markets