Heikin-Ashi: another candle
motivated by e-mail from Ken G.
 We've talked about candlesticks before. Ths "usual" candlestick generates a neat chart, using only today's Open, High, Low and Close ... but ignores any previous data. >Previous? Like last week's High, Low ... ? Actually, I want to talk about the Heikin-Ashi candles which use one piece of info from yesterday's stock numbers: the Close. It also uses some of its own numbers from yesterday. The H-A candles generate a different set of High, Low, Open and Close ... like so:
If O(n), H(n), L(n), C(n) are today's stock Open, High, Low and Close
and
xO(n), xH(n), xL(n), xC(n) are today's Heikin-Ashi Open, High, Low and Close
then
 xC(n) = ( O(n) +H(n) +L(n) +C(n) )/4 the average of today's stock numbers xO(n) = ( xO(n-1) + C(n-1) ) / 2 the average of yesterday's H-A Open and yesterday's stock Close xH(n) = Max[ H(n), xO(n), xC(n) ] the Maximum of today's stock High and today's H-A Open and Close xL(n) = Min[ L(n), xO(n), xC(n) ] the Minimum of today's stock Low and today's H-A Open and Close
 >Huh? That's confusing! I mean ... Okay, here's a picture which illustrates the standard candles and the Heikin-Ashi candles:   >That's still confusing! No matter. The interesting thing is what Heikin-Ashi does to the slick candlestick patterns, like these:
 For example, in the Doji, the Open and Close are equal (or very nearly so). You do the Heikin-Ashi ... and it's gone. Indeed, in order to see a Heikin-Ashi Doji, we'd need xO(n) = xC(n): ( xO(n-1) + C(n-1) ) / 2 = ( O(n) +H(n) +L(n) +C(n) )/4 which is unlikely. In fact, I played with several stocks and found no Dojis so I figure that ... >You played ... with what? A spreadsheet. It's just a modification of an earlier spreadsheet, but you can pick reg'lar or Heikin-Ashi and ... >Can you just show the spreadsheet?

>It's guaranteed to work?
Nope.