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Technical Analysis Strategies: Development of Heiken Ashi Stochastic

Roy Trivedi, Smita (2018): Technical Analysis Strategies: Development of Heiken Ashi Stochastic.

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Abstract

To trade effectively and profitably, we must understand the trend in the market. While a plethora of popular technical analysis indicators attempt to provide a greater understanding of the trend in the market, they are limited in signaling both trend generation and momentum. Based on the Japanese Heiken Ashi (HA) candles we develop the Heiken Ashi stochastic or HASTOC, which can reflect in a single number both the likelihood of trend generation and momentum in the market. We back test ten strategies using HA and HASTOC for three currencies, one index and one currency for three major time frame in each market. We find the strategies give consistent profits for these markets. The study contributes to economic literature as well as to practical trading scenario by the development of a new indicator, HASTOC which in a single number, gives the trend generation and momentum in the market.

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