Heiken Ashi Trend Following with Supertrend, ADX, and Layered Stops
Summary
This system combines Heiken Ashi candle shapes with Supertrend direction and an optional ADX strength filter to identify long and short trend entries. A candle with no lower wick supports a long signal, while one with no upper wick supports a short signal; entries must also agree with Supertrend and, when enabled, clear an ADX threshold. An opposing wickless candle or a stop condition prompts an exit. The strategy describes three stop approaches: an ATR-based trailing stop, a stop tied to recent swing highs or lows, and a percentage-based safety stop. Position sizing is described as a share of account equity.
The document explains the intended logic and adjustable components, but provides no backtest results or evidence of live performance. It warns that numerous tunable settings can encourage overfitting, that sharp reversals can still cause losses, and that ranging or quiet markets may produce repeated false signals. The suggested volatility, time, volume, and related-market filters are possible extensions rather than demonstrated improvements. Performance and execution may also depend on instrument, timeframe, and stop behavior.
Key ideas
- Wickless Heiken Ashi candles provide directional signals that must agree with Supertrend.
- An optional ADX threshold is intended to screen out weak or ranging conditions.
- ATR trailing, swing-point, and entry-price safety stops form the described risk controls.
- The document offers no performance evidence and flags parameter sensitivity and whipsaw risk.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.