Hi all, I have a small doubt. Whenever we change Chart type to Heiken Ashi, the values of all Indicators changes completely. For instance the value of a particularity day in daily chart on any indicator will be different for candlestick chart than Heiken Ashi chart. The Doubt is The Indicators like MACD or SuperTrend ,etc, during their calculation using OHLC, Do they use Heiken Ashi's OHLC if on Heiken Ashi or does they take normal OHLC? I was writing SuperTrend and Heiken Ashi Combination in python using Pandas. Should I use Heiken Ashi's OHLC to write SuperTrend Strategy or with normal?
They use Heiken-Ashi OHLC, which will change the indicator values. This makes backtesting with HA charts very complicated.
Why would backtesting become complicated.. If we have defined a function of HA and we run any indicator on top its OHLC. Where will be the problem? I havent done backtesting before so I really dont know what will I face if I do so.. Can you throw some light on it please?
Because the HA Open and HA Close are not the real open and real close. This will create unrealistic trading prices on systems that enter orders at the "open" of the next bar. You need to overlay an actual OHLC price series on top of the HA price series to track the actual price.
Ah!!... Got it... Ya... So basically if i write a logic that if HA_Close> say MA(5): Buy @ current market price (Which can be totally different from the HA_Close...) "You need to overlay an actual OHLC price series on top of the HA price series to track the actual price."- You mean this for analysis purpose, right?
Any indicators or oscillators or any combination of them with chart types do you suggest to put into algo trading that I can backtest?
There's no particular indicator that works especially well compared to "normal" charts. I use them more as a visual aid to confirm the trend. (They are good for keeping you in trends, because it takes a lot to flip from red to green and vice-versa).