The Black Candles strategy


The Black Candles strategy uses a unique channel. The channel is based on the popular Heikin Ashi candles. It is capable of detecting the first stage of a new trend. The colour of the candles is not relevant. Therefore, they are black.

The following is typical for the Black Candles strategy:

  1. A unique channel based on Heikin Ashi candles.
  2. The channel and the standard candles are in the same chart BUT in a different time frame. Traders can see the action AND have better signals based on a higher time frame.
  3. The SuperTrend indicator filters the trading signals.
  4. The profit is maximized with the unique trailing targets.

The Black Candles strategy can be used for day trading and swing trading.


Suitable for : Market indices (DAX, DOW ...)
: Forex (EUR/USD ...)
: Commodities (oil, gold ...)
: Stocks
Instruments : Futures, CFDs, forex and stocks
Trading type : Day trading
Trading tempo : Several signals per day
Using NanoTrader Full : Manual or (semi-)automated

The strategy in detail

The channel is based on Heikin Ashi candles. The Heikin Ash candles are not visible in the chart. The black candles visible in the chart are standard candles, familiar to every trader.

This example shows the trading channel and the black candles. The red line is the SuperTrend indicator. Its position, above the chart, and its colour, red, indicate the market is bearish.

Free Heikin Ashi Black Candles trading strategy.

Also unique is the fact that the channel and the standard candles are not in the same time-frame but … they are visible in the same chart. This is called an aggregation. Say, the trader sets the aggregation to 2 and the time frame of his chart to 10 minutes. In this case, the black candles are 10-minute candles and the channel is based on invisible 20-minute Heikin Ashi candles.

Traders can set their black candles in a small time frame, for example 5 minutes, and see the market action. At the same time, they can set the aggregation to, for example, 6 so the channel, which gives the signals, is based on 30-minute invisible Heikin Ashi candles. As always in trading, increasing the time frame reduces the number of trading signals but increases the quality of the signals.


When to open a position?

A signal occurs when ...

  1. the channel changes colour, and
  2. the trader's conditions regarding the candles are met.

In order to have a buy signal the trader can define the sequence of red ‘block’s and green ‘blocks’ that needs to occur. If the aggregation is set to 2, then blocks consist of two black candles. The default setting for the strategy is two red blocks followed by one green block. A short sell signals consist of two green blocks followed by a red block.

This example shows a buy signal with the default settings as described above. Two red blocks (four black candles) and one green block (two black candles), constitute a buy signal.

Black Candles trading signals.

The well-known SuperTrend indicator serves as a filter for the signals. Buy signals are only accepted if the trend is positive. Short sell signals are only accepted if the trend is bearish.

The time filter is set to 07h00 – 22h00. Signals will only be accepted during this period. The trader can change these settings.


When to close a position?

The open position is bracketed by

  1. a trailing target order, and
  2. a trailing stop order.

Both the target and the stop are based on the current volatility of the market. The trailing target is unique. This sensational tool automatically changes the profit target. If the tool detects a strong market, it will (continue) to increase the profit target in an attempt to maximize the trader’s profit.

This example shows a buy signal. Notice how the trailing target moves up to maximize profit when the market goes up significantly.

Black Candles trading strategy trade with profit..

This example shows a short sell signal. Notice how the trailing target moves down to maximize profit when the market drops significantly.

Black Candles trading strategy short sell with profit..

Tip: if you want to quickly check the profit (loss) of any time frame and aggregation combination open the equity chart in the Designer dialog. When you change a parameter the equity chart instantly shows the impact of the change on the profit (loss).


Practical implementation

Using the NanoTrader Full follow these steps:

  • Select the instrument you want to trade and open the chart.
  • Select the Black Candles strategy in the WHS Strategies folder.
  • Set the time frame of the chart and select an aggregation for the channel.
  • If required, adapt any other parameters as described above.
  • If you want to trade semi-automatically (open position manually, close position automatically), activate TradeGuard+AutoOrder in the chart. If you want to trade automatically, activate AutoOrder in the chart.