Heiken Ashi Multi Ribbon

Heiken  Ashi Multi Ribbon is multi time frame trading system that gives confirm trading signal in favor of the trend. This trading system gives the signal when long-term, medium-term, and short-term trends are in the same direction & hence such kinds of signals give a better risk to reward ratio.

Trend trading systems are designed to give long trades when the market is forming higher high and higher lows and short trades when the market is forming lower highs and lower lows. Let’s try to understand the working of this trading system with few examples

Heiken Ashi Multi Ribbon Overview

Heiken Ashi Ribbon indicator is based on the moving averages of the past market data. The main advantages of moving averages are first that they smooth the data and thus provide a clearer visual picture of the current trend and secondly, that signals can give a precise answer as to what the trend is.

Heiken Ashi Multi Ribbon Overview

If the price is above the Ribbon then the trend is up and if the ribbon color will change to Blue. If the price is below the Ribbon then the trend is down and the ribbon color will change to red.

Also Read: Pivot Point Shift with EMA Filter

Heiken Ashi Multi Ribbon Explanation

In this trading system, 20,50, and 100-period moving averages are used to plot the ribbon. 100-period ribbon guides about the trend, whereas 50-period ribbon along with 20-period ribbon indicates the momentum of the trend.

Heiken Ashi Multi Ribbon Explanation

If the price is above or below all the ribbons then trend and momentum both are in favor and it’s a good time to take long or short trades. The same Ribbon can also be used as a trail stop loss.

Heiken Ashi: Buy Conditions

Heiken Ashi Buy Signals
  • Price should trade about all the Ribbons.
  • The 20-period ribbon should move above the 50-period ribbon and the 100-period ribbon.
  • Breakout and pullback on the ribbon are criteria for entry.
  • Traders can hold the trade till the time price stays above all the ribbons.

Heiken Ashi: Sell conditions

Heiken Ashi Sell Signals
  • Price should trade below all the Ribbons.
  • The 20-period ribbon should move below the 50-period ribbon and the 100-period ribbon.
  • Breakdown and pullback on the ribbon are criteria for a short entry.
  • Traders can hold the trade till the time price stays below all the ribbons.

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I have been actively trading stocks and currencies since April 2012. Besides trading with my personal money I am a technical analyst in a mutual fund which has Rs. 1 billion in assets under management. At my leisure, I love attending live music, traveling, and partying with friends.

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