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Hi, i've recently come across a strategy called the "EASY" method and/or the "SYNERGY" method, which uses HA bars in combination with the TDI and a pair of SMMA indicators. (strategy pdf attached for anyone interested).
I'm wondering if anyone has a good amount of experience trading the ES and/or NQ using HA bars, and has a recommendation on what bar size to use for the smoothest price action on the chart?
The strategy calls for 15 minute bars, but to me it looks like the move is long gone by the time a signal prints.
I've also looked at 2 minute and 5 minute bars, but they look a bit choppy. Maybe the strategy just isn't a good fit for Futures indexes?
Disclaimer - i am not affiliated in any way with the people that made this PDF.
Without having looked at the pdf -- and without having any experience actually trading based on Heikin Ashi either ( ), I would caution you about using HA for any kind of automated strategy trading, or manual trading either if based on somewhat mechanical rules.
The reason is that HA looks great and produces a very smooth, easy to read chart, but it doesn't actually match up that well to actual price because of the smoothing. It is somewhat as if you put a short-term moving average on your chart, and then traded the moving average instead of the price bars. That's because it represents the trend in price pretty well, but price isn't necessarily going to be right where the MA is. Similarly, if you just put HA bars on the same chart as regular price bars, they will not necessarily match up that well. They will often be close, but so will a 5-period MA, for instance. You may see the trend, but you may get filled at a different price than you expect you will.
Now, there are many implementations of HA, and there are traders who use them, so someone who trades based on HA may have a different opinion, and certainly a better-informed one. I have looked at HA but have not traded it. I think it's more likely to be useful as an indicator than as a representation of price, because it doesn't actually represent price. It represents a smoothed version of price.
Just a caution based on my opinion.... if someone with real HA experience wants to jump in and differs, they may be right. But I would be very hesitant to go into HA trading. Maybe as an indicator, but not as showing price just by itself.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
The Traders Index (TDI) plus the EASY rules my personal list of "the 400 things every trader should learn."
The SMMA is great but for personally I would punt the HA bars until, if using them at all, would be far late in my assessment cycle.
TDI /EASY are a good strategy family to study if for no other reason to help spawn trading ideas. Though to gain the most value from that time investment I would recommend forgetting any mention of HA bars and instead execute a detailed study using both Minute and similar sized Tick charts side by side to see and and build around actual price action (along with volume, velocity session volatility patterns and cycles).
If I used HA bars that would be the last layer I added to the strategy only to smooth the visible price action, reduce visible noise and pretty it up.
If you just love HA then I recommend for the analysis and testing cycles you just add an extra moving average on top of the true Price Action bars so you can see where those HA bars will land when you switch. HA is just another moving average algorithm. Using a MA to proxy for HA bars might be the best of both worlds. You can see price action and improve testing accuracy AND still see where the HA bars will land. As well as long term be able use the HA bars in production.
You can tell I don't trade with HA bars but I decided to reply on the size question.
1) There are a few posts in the FIO forums that speak to HA bar sizing and a much larger number posts about the of sizing Renko bars on these markets. These posts might be helpful.
2) I once studied using the somewhat similar UniRenko on ES during regular trading hours after 10:30am found that 3, 4, 8, 16 and 24 range rotated at being the best intraday range depending on immediate market volatility.
3) My recommendation for HA bar sizing is 20-33% of your decision point bar size. So if you key strategy decisions are made on 15 min bars then lay HA bars on 3 minute bars to give you smoothed visibility to the price action between turning points.
4) Volatility has been changing so much recently that I do not believe that currently there is any one HA bar config you can trust to be reliable. If you are assessing and testing intraday in time frames as tight as 1, 5 and 15 mins then I might try to spin up three different overall configs each tuned for a different volatility. Or if using just one config the strategy might perform much better if you limit it one range of volatility, which will take a lot of testing across many time periods, across years to reduce the level of deceptive curve fitting.
The image below uses Cory's ADR Indicator how show much ES & NQ volatility are changing.
30 day ADR using Cory's ADR indicator.
Changing volatility: Friday's ADR showed 30 days of decline and a quite market .. and now spikes again. It will be hard to find on group of settings that do well across constantly changing volatility.
ADR from CorysADR
ES - 30 Day ADR: 54 Current ADR: 51.25 NQ - 30 Day ADR: 193 Current ADR: 357.25
I am guessing you wanted stronger more direct HA centric answers. Me too. I am hoping people drop in with such resounding rebuttals to my poor view of HA that my current assumptions are shattered and I get a new set of tools for my toolkit.
), I would caution you about using HA for any kind of automated strategy trading, or manual trading either if based on somewhat mechanical rules.