THE HEIKIN ASHI MORNING TREND STRATEGY

Description

The Heikin Ashi Morning Trend strategy (HAMT) is a so-called market open or morning strategy used to trade the DAX and the DOW. The strategy only gives trading signals in the morning during a precise ‘window of opportunity’. The HAMT strategy and its tools were designed by Dr. Jürgen Abel, who programmed and tested many market open strategies because he was not satisfied with the results of standard break-out systems. Dr. Abel is an IT professional with over 30 years experience in the domain of algorithms. He trades actively since 1999.

The trading signals are based on the trend before and after the market opens. If the first trend is strong during the early phases of the market open, the DAX and the DOW will continue to evolve for some time in the direction of their first trend. If no major change in this first trend occurs, a position can even remain open the whole day.

 

   
Suitable for : DAX and DOW
Instruments : Futures and CFD
Trading type : Day trading
Trading tempo : Maximum 1 trade per index per day
Using NanoTrader Free : Manual
Using NanoTrader Full : Manual or (semi-)automated

 

The Heikin Ashi Morning Trend strategy package contains:

• 1 strategy ready for the DAX + 1 strategy ready for the DOW, activated in the platform
• 1 hour online teaching in German or English by Dr. Jürgen Abel
• Participation in group webinars
• Unlimited telephone access to the help desk

Click here to buy the Heikin Ashi Morning Trend strategy package in the store

The strategy in detail

The strategy is based on Heikin Ashi candles which are displayed as 5-point range bars. The span of these Heikin Ashi range bars is 5 points. It is nevertheless possible to switch between Heikin Ashi candles and standard candles.

The majority of market open strategies use price levels to determine their entry point. The Heikin Ashi Morning Trend is unique in that it uses a proprietary concept, Trend Status, to determine the entry point. The exit point is based on what German traders call Markttechnik. This concept can be loosely translated as market movements and trend.

The Heikin Ashi Morning Trend Strategy from Juergen Abel  

This example shows a complete day. The Heikin Ashi range bars and the intra-day trend are visible.

The trader has the option to show the intra-day trend in three colours (green is up, red is down, blue is neutral) instead of the one colour as shown above.

 

When to open a position?

The HAMT strategy has a precise window of opportunity. For the DAX the window of opportunity is between 8h10 and 9h30. For the DOW the window of opportunity is between 15h30 and 19h00. Outside these hours there are no trading signals. The window of opportunity is coloured in greens and reds in the chart.

Signals are given by the proprietary Trend Status tool. The Trend Status colours the window of opportunity dark green when a buy can occur. The Trend Status colours the window of opportunity dark red when a short sell signal can occur. When a buy signal occurs, it is indicated by a small green triangle and an even darker green in the chart background. When a short sell signal occurs, it is indicated by a small red triangle and an even darker red in the chart background.

Initial Signal (Heikin Ashi Morning Trend Strategy)  

This example shows the coloured window of opportunity and its colours depending on the Trend Status. At no time the colours become darker. No trading signal occurs this day.

 

Short Sell Trading Signal (Heikin Ashi Morning Trend Strategy)  

This example shows a short sell signal. The chart background is now dark and when the signal occurs its colour is even darker. In this example the number of Heikin Ashi range bars is much higher in the window of opportunity, indicating more frequent 5-point moves.

The trading signal first determines an entry level equal to the high (buy) or the low (short sell) of the candle during which the signal appears. The market price should reach the entry level in the next candle. If the market does not reach the entry level in the next candle, the signal is no longer valid. The trader can indicate the maximum number of trading signals he wishes to receive during one morning. The default setting is maximum two signals.

Buy Signals for Traders  

This example shows two buy signals. Neither buy signal is triggered.

 

When to close a position?

The Heikin Ashi Morning Trade strategy uses a stop. The stop is based on the intra-day trend. The intra-day trend is visible in the chart as a zigzag.

The strategy also uses a time filter. A time filter closes a position at a specific point in time. In the case of the DAX, any position still open at 17h30 will be closed. In the case of the DOW, any position still open at 21h50 will be closed.

The strategy does not use a profit target. A position will either be closed by the stop or the time filter.

Trading Strategy with Stop, Time filter and Limit  

This example shows a buy signal. The stop is never touched. The position is closed by the time filter at 17h30.

The trader has several options regarding the settings of the stop level:

Firstly, the stop can be set to ‘near’ or ‘wide’. The default setting is ‘near’.

Secondly, in order to limit the risk to a certain level, the trader can specify that the stop can never be further away than x times the Average True Range (note: the ATR is an indicator of volatility). The default setting is 5 times the ATR.

Thirdly, in order to not have the stop precisely at the level indicated by the zigzag, the trader can opt to have the stop for a long position slightly below or the stop for a short sell position slightly above.

The Heikin Ashi Morning Trend strategy package contains:

• 1 strategy ready for the DAX + 1 strategy ready for the DOW, activated in the platform
• 1 hour online teaching in German or English by Dr. Jürgen Abel
• Participation in group webinars
• Unlimited telephone access to the help desk

Click here to buy the Heikin Ashi Morning Trend strategy package in the store

Practical implementation

• Select the strategy in the WHS Store folder.

• Activate TradeGuard+AutoOrder or AutoOrder.

The Heikin Ashi Morning Trader strategy can be used in the NanoTrader Free and the NanoTrader Full. NanoTrader Free users can the alert functions to get a notification and then place the order manually. When doing so they can request a stop is added automatically. NanoTrader Free users must manually slide their stop to the levels drawn by the strategy in the chart.

Click here to buy the Heikin Ashi Morning Trend strategy package in the store