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Heikin Ashi average closing price: SVE_haC

Heikin ashi, Japanese for “average bar”, is a technique using a special kind of candle stick bars for better visualizing price trends. This technique has been introduced by Dan Valcu in the February 2004 issue of Stocks & Commodities magazine.

The original calculation of the heikin ashi candle stick is as follows:
xClose = (Open+High+Low+Close)/4; or the average price of the current bar
xOpen = [xOpen(Previous Bar) + Close(Previous Bar)]/2; or the midpoint of the previous bar
xHigh = Max(High, xOpen, xClose); the highest value in the set
xLow = Min(Low, xOpen, xClose); the lowest value in the set

However, since the xClose component is always less than or equal to the High component, it is redundant within the MAX function of xHigh and a modified xHigh can be defined as: 
modified xHigh = Max(High, xOpen);
The same reasoning is valid for the xLow function:
modified xLow = Min(Low, xOpen);

Next I calculate the average heikin ashi closing price as the result of:
(xClose+xOpen+xHigh+xLow)/4.

We will mainly use this re-calculated closing price as a smoothed closing price introducing almost no delay. In the hourly chart below, you can see in red the normal closing prices and in blue the re-calculated average heikin ashi closing prices.

 

 

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For MetaTrader4 you can use the following custom formula (SVE_haC):

//+------------------------------------------------------------------+ //| SVE_haC.mq4                                                      | //| Copyright c 2010, Sylvain Vervoort                               | //| http://stocata.org/                                              | //+------------------------------------------------------------------+ //| calculation of the average heikin ashi closing price             | //| (haO+haH+haL+haC)/4                                              | //| based on the heikin ashi re-calculated prices                    | //| Index buffer 3 holds the haOpen value                            | //+------------------------------------------------------------------+ #property copyright "Copyright © 2010, Sylvain Vervoort" #property link "http://stocata.org/" #property indicator_chart_window #property indicator_buffers 5 #property indicator_color1 Blue #property indicator_width1 1 //---- extern color color1 = Red; //---- buffers double haBuffer1[]; double haBuffer2[]; double haBuffer3[]; double haBuffer4[]; double haBuffer5[]; //---- int ExtCountedBars=0; //+------------------------------------------------------------------+ //| Custom indicator initialization function                         | //|------------------------------------------------------------------+ int init() { //---- indicators IndicatorBuffers(5); SetIndexStyle(0,DRAW_LINE); SetIndexBuffer(0,haBuffer5); SetIndexBuffer(1,haBuffer1); SetIndexStyle(1,DRAW_NONE); SetIndexBuffer(2,haBuffer2); SetIndexStyle(2,DRAW_NONE); SetIndexBuffer(3,haBuffer3); SetIndexStyle(3,DRAW_NONE); SetIndexBuffer(4,haBuffer4); SetIndexStyle(4,DRAW_NONE); IndicatorShortName("SVE_haC"); return(0); } //+------------------------------------------------------------------+ //| Custom indicator iteration function                              | //+------------------------------------------------------------------+ int start() { double haOpen, haHigh, haLow, haClose, AvCl; if(Bars<=10) return(0); ExtCountedBars=IndicatorCounted(); //---- check for possible errors if (ExtCountedBars<0) return(-1); //---- last counted bar will be recounted if (ExtCountedBars>0) ExtCountedBars--; int pos=Bars-ExtCountedBars-1; while(pos>=0) { haOpen=(haBuffer3[pos+1]+haBuffer4[pos+1])/2; haClose=(Open[pos]+High[pos]+Low[pos]+Close[pos])/4; haHigh=MathMax(High[pos], MathMax(haOpen, haClose)); haLow=MathMin(Low[pos], MathMin(haOpen, haClose)); AvCl=(haOpen+haClose+haHigh+haLow)/4; if (haOpen<haClose) { haBuffer1[pos]=haLow; haBuffer2[pos]=haHigh; } else { haBuffer1[pos]=haHigh; haBuffer2[pos]=haLow; } haBuffer3[pos]=haOpen; haBuffer4[pos]=haClose; haBuffer5[pos]=AvCl; pos--; } return(0); } //+------------------------------------------------------------------+

If you create this indicator in MetaTrader, make sure you give it the name "SVE_haC", because we will call this function by this name from other indicators that we will present further on.

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