Heikin Ashi Trading Setup

Updated

Here I have shown a Heikin Ashi Trading Setup. I'm using forementioned candles, with smoothing, and a PMARP signal to confirm entry (Long or Short) positions.
For the PMARP I give full credit to Eric Krown and is linked in this published idea. I've adjusted the settings to give a cleaner look and to use only the relevant information.

Trading strategy is anchored to the chart, but here it is again:

STRATEGY RULES - Heikin Ashi Candles

LONG
Wait for BUY signal, then wait for candle to close
Next smoothing bar or 2nd should be BLUE
PMARP must be on OR above 85%
SL on bottom of bar before BUY candle
TP on SELL candle or first YELLOW candle

SHORT
Wait for SELL signal, then wait for candle to close
Next smoothing bar or 2nd should be YELLOW
PMARP must be on OR below 15%
SL on TOP of bar before SELL candle
TP on BUY candle or first BLUE candle

STRATEGY RULES - PMARP

Once candle chart prints a BUY signal, wait for PMARP to be on OR above the 85% line
Once candle chart prints a SELL signal, wait for PMARP to be on OR below the 15% line

This seems to work well in backtesting on lower time frames such as 5M, 15M, and 30M. I'm using this for scalping/day trading so haven't tested on longer time frames.

Good luck every *NOT FINANCIAL ADVICE*

Note

This is the script for the Heikin Ashi Smoothed Candles
//version=1
//creator: Asiamtm on twitter
//author: Andy

//Name of Script

study("Heikin Ashi Smoothed w/Strategy", overlay=true)

//User input for EMA length

EMAlength=input(50,"EMA LENGTH?")

//Signal lines

src=ohlc4
haOpen = (src + nz(haOpen[1]))/2
haC=(ohlc4+haOpen+max(high,haOpen)+min(low,haOpen))/4
EMA1=ema(haC,EMAlength)
EMA2=ema(EMA1,EMAlength)
EMA3=ema(EMA2,EMAlength)
TMA1=3*EMA1-3*EMA2+EMA3
EMA4=ema(TMA1,EMAlength)
EMA5=ema(EMA4,EMAlength)
EMA6=ema(EMA5,EMAlength)
TMA2=3*EMA4-3*EMA5+EMA6
IPEK=TMA1-TMA2
SIGNAL=TMA1+IPEK
EMA7=ema(hlc3,EMAlength)
EMA8=ema(EMA7,EMAlength)
EMA9=ema(EMA8,EMAlength)
TMA3=3*EMA7-3*EMA8+EMA9
EMA10=ema(TMA3,EMAlength)
EMA11=ema(EMA10,EMAlength)
EMA12=ema(EMA11,EMAlength)
TMA4=3*EMA10-3*EMA11+EMA12
IPEK1=TMA3-TMA4
SIGNAL1=TMA3+IPEK1

//Plots the Buy and Sell signal when signal lines cross and prints the trade strategy

plot(SIGNAL, color=red, linewidth=2)
plot(SIGNAL1, color=blue, linewidth=2)
plotshape(crossover(SIGNAL1,SIGNAL), style=shape.labelup, location=location.belowbar, color=green, size=size.tiny, title="buy label", text="BUY", textcolor=white)
// IGNORE plotshape(crossover(SIGNAL1,SIGNAL), style=shape.labeldown, location=location.abovebar, color=green, size=size.huge, title="buy strategy", text="SL on bottom of candle\n before BUY signal\n TP at next B or S label\n The bigger the candle\nthe stronger the signal\nWait for signal candle\nto close for confirmation", textcolor=white)
plotshape(crossover(SIGNAL,SIGNAL1), style=shape.labeldown, location=location.abovebar, color=red, size=size.tiny, title="sell label", text="SELL", textcolor=white)
// IGNORE plotshape(crossover(SIGNAL,SIGNAL1), style=shape.labelup, location=location.belowbar, color=red, size=size.huge, title="sell strategy", text="SL on top of candle\n before SELL signal\n TP at next B or S label\n The bigger the candle\nthe stronger the signal\nWait for signal candle\nto close for confirmation", textcolor=white)

//Smoothing

Smoothing1=input(5)
o=ema(open,Smoothing1)
c=ema(close,Smoothing1)
h=ema(high,Smoothing1)
l=ema(low,Smoothing1)

haclose = (o+h+l+c)/4
haopen = na(haopen[1]) ? (o + c)/2 : (haopen[1] + haclose[1]) / 2
hahigh = max (h, max(haopen,haclose))
halow = min (l, min(haopen,haclose))

Smoothing2=input(5)
o2=ema(haopen, Smoothing2)
c2=ema(haclose, Smoothing2)
h2=ema(hahigh, Smoothing2)
l2=ema(halow, Smoothing2)

col=o2>c2 ? yellow : blue
plotcandle(o2, h2, l2, c2, title="Heikin Ashi Smoothed", color=col)

Note

For the PMARP script, you can get from Eric and edit as needed.

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