Bybit Arbitrage is a trading tool that simplifies arbitrage trading by capitalizing on funding rate and price differences.

If you're seeking consistent returns with minimal risk, Bybit Arbitrage is the perfect ally.

 This robust tool empowers you to generate regular profits with minimal risks by capitalizing on price disparities across different markets. Its user-friendly interface lets you easily spot and exploit these differences, so that you can execute flawless arbitrage trading in the crypto market with confidence. Read on to learn how Bybit Arbitrage makes arbitrage trading an effortless way for you to achieve low-risk gains.

 is the buying and selling of the same or similar asset(s) at the same time across different markets to earn from slight price deviations. This act of purchasing an asset at a fixed price — while simultaneously selling it at a higher price — allows a trader to instantly make profits without any risks. 

While arbitrage trading has long been a staple in traditional financial markets, such as stock and forex, the advent of crypto trading has propelled arbitrage trading to new heights — thanks to the heightened volatility of the crypto market. Additionally, unlike traditional stock markets, crypto markets are traded 24/7, offering more opportunities for arbitrage traders to reap profits from the price gaps across exchanges and markets. 

 across exchanges or within a single exchange. Keep in mind that if you opt to arbitrage trade across different platforms, accessing your profits may prove to be complex, due to the need to transfer your assets between the exchanges, which can take up to several days to complete. On the other hand, arbitrage trading on a single platform is more straightforward — but more competitive as well.

There are multiple arbitrage trading strategies, but the most common ones in the crypto market include funding rates arbitrage, spot-futures arbitrage and futures arbitrage. 

Funding rates arbitrage allows traders to profit from variations in funding rates between 

 contracts. In contrast, spot-futures arbitrage enables traders to profit from price disparities between the spot and 

 for the same asset. Meanwhile, futures arbitrage involves profiting from price discrepancies between futures contracts with different expiration dates.

Bybit Arbitrage is a trading tool that helps traders identify arbitrage trading opportunities in two ways: funding rate and spread. 

The user-friendly interface organizes trading pairs based on either funding rates or spreads in different markets, so that traders can easily spot disparities in funding rate or price across the markets at a glance. 

Bybit Arbitrage is exclusively available to 

 mode. It facilitates arbitrage trading for USDT Perpetual, USDC Perpetual and USDC Futures contracts, thereby allowing you to enjoy arbitrage trading opportunities between USDT 

Spot pairs and USDT Perpetual pairs, or USDC Spot pairs and USDC Perpetual/Futures pairs. 

The Funding Rate Arbitrage feature exploits differences in funding rates between the Spot and Perpetual/Futures markets on the Bybit exchange. With the Funding Rate feature, traders can earn funding fees while simultaneously managing their positions in order to minimize potential losses and maximize gains through positive and negative arbitrage strategies.

Funding rates for the different trading pairs are listed in descending order. This helps traders to easily leverage the interest rate differential between Spot and Perpetual/Futures contracts.

The Funding Rate feature also allows you to 

 orders (with the same amount, but in different directions) in both Spot and Perpetual/Futures, which enables you to earn funding fees while mitigating potential losses (with potential gains).

holders in Futures/Perpetual contracts pay short position holders. You can leverage this situation by executing a positive arbitrage, which involves

 buying a Spot pair and taking a short position in 

Perpetual to earn steady funding fees. Alternatively, if the funding fee is negative, short position holders pay long position holders. In this case, you would perform a negative arbitrage by shorting a Spot pair and going long in a 

The Spread Arbitrage feature helps traders capitalize on price discrepancies between different markets for the same cryptocurrency asset. With this feature, you can easily compare the market prices of an asset traded across various trading pairs and contracts. While Spread Arbitrage may be similar to spot-futures arbitrage, it offers more arbitrage opportunities since it covers a broader range of markets, unlike spot-futures arbitrage, which targets specific markets

With Spread Arbitrage, the aim is to profit from the eventual price convergence as you buy the crypto asset at a lower price in one market (e.g., Spot) and sell it at a higher price in another market (e.g., Futures). 

As the futures price will eventually align with the Spot price when the contract expires, you’ll be able to take advantage of the simultaneous price disparity for the same asset.

In order to trade with Bybit Arbitrage, you’ll first need to 

. Currently, Bybit Arbitrage is exclusively accessible via the 

 for the web version, which will be launched soon!

Bybit Arbitrage offers multiple advantages.

Bybit Arbitrage is a powerful tool for traders seeking low-risk gains in the volatile crypto market. With its intuitive interface and exclusive features, traders can effectively leverage funding rate and price differences to maximize profits while minimizing risks. Bybit Arbitrage offers diverse benefits that make arbitrage trading more accessible and profitable than ever before.

Beginner

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How to Use Bybit Arbitrage to Achieve Funding Rate and Price Difference Arbitrage

An Ethereum Spot ETF is an exchange-traded fund that tracks the real-time price of Ether and allows investment through traditional stock markets. Learn more.

Earlier this year, the U.S. Securities and Exchange Commission (SEC) gave the green light to a number of Bitcoin Spot exchange-traded funds (

), sparking optimism that similar approval might be extended to Ethereum Spot ETFs. Adding to the excitement, news of Ethereum Spot ETF approval in Asia’s first region has heightened anticipation for a potential approval and launch in the U.S. However, despite the buzz, some industry observers remain skeptical. This article explores the potential impact of Ethereum Spot ETF approval on the broader crypto market.

An Ethereum Spot ETF is an exchange-traded fund that tracks the real-time price of 

 and allows investment through traditional stock markets. It offers investors a way to invest in Ether without having to actually buy or hold the asset itself.

An Ethereum Spot ETF operates by pooling investor funds to purchase Ether, which is held in reserves by the ETF.

Rather than navigating the complexities of 

 and exchanges, investors buy shares of the ETF through regular brokerage accounts, just as they would with traditional stocks. These shares represent a stake in the Ether held by the ETF, providing a simple and regulated way to own Ethereum indirectly.

In order to create ETF shares, authorized participants — usually financial institutions — purchase Ether in exchange for ETF shares of equal value, which are then sold onto the market. An authorized participant can also redeem shares by buying enough ETF shares and exchanging them for Spot Ether and taking those shares away from the market.

As a result, the price of ETF shares tends to fluctuate in line with Ethereum's Spot market price. If it didn’t, there would be an 

 opportunity to profit from any mispricings in the ETF price. However, it’s still theoretically possible for the ETF to trade at different prices simply because of supply-and-demand factors.

ETFs as securities are regulated by the SEC, so an Ethereum Spot ETF provides a regulated product that investors can purchase. By contrast, Spot Ether is being investigated by the SEC to determine whether it should be classified as a security, and currently lacks regulatory clarity. 

This setup offers numerous benefits for investors. It simplifies the investment process, allowing anyone with a brokerage account to invest in Ethereum without setting up a crypto exchange account or managing storage. This can save time and give some investors greater peace of mind. An ETF structure also provides the regulatory clarity that institutional investors need, which can enhance liquidity and trading volumes.

Security is paramount in the realm of cryptocurrency, and the ETF provider takes it seriously. To safeguard Ether holdings, ETF providers employ a combination of 

 and insured custodial services. As a result, they could potentially minimize the risk of theft or loss that individual crypto investors may encounter.

The Ethereum Spot ETF bridges traditional finance (TradFi) and the exciting (but still growing) cryptocurrency space. It offers the security and ease of trading associated with traditional financial markets while opening up investment opportunities in Ethereum for a broader audience.

Both excitement and regulatory scrutiny characterize the current landscape of Ethereum Spot ETFs. Major financial institutions like 

 and Fidelity have submitted applications for these ETFs to the SEC. Still, decisions have been delayed, with the next 

If applicants begin updating their filings by April, this may indicate they’re incorporating feedback from the regulator, which could be interpreted as a positive sign. However, a lack of updates to filings could indicate that the SEC isn’t maintaining the same level of discussions with issuers that led to its 

Another challenge is that the SEC is still investigating whether Ether should be classified as a security, especially since it transferred its consensus mechanism to 

. Earning rewards through staking could meet criteria that determine whether an asset is a security. Ethereum also provides a foundation for 

 (DeFi), which could add to the complexity of the review. 

Analysts' opinions vary regarding the likelihood of ETH ETF approval. One Bloomberg analyst, for instance, 

 chance of approval by May. However, the SEC's recent silence might hint at a less favorable outcome.

The approval of Ethereum Spot ETFs is eagerly awaited because it could mirror the impact of Bitcoin Spot ETF approval, which led to an influx of capital in the market. It would mark a pivotal milestone, likely to attract increased investment and further validate cryptocurrency. The crypto community is closely monitoring these developments, as the coming months will be crucial in shaping the future of Ethereum investment opportunities.

 was recently given to the first Spot Bitcoin and Ethereum ETFs in one of the Asian regions. This landmark decision positions the city as a trailblazer in the Asian financial landscape, embracing the integration of popular cryptocurrencies into mainstream investment avenues.

This milestone has sparked excitement within the crypto community, indicating a positive reception toward digital assets in that region. Analysts believe this move could set a precedent for other jurisdictions to follow, potentially leading to broader acceptance and recognition of cryptocurrencies as a legitimate asset class.

These newly approved ETFs are expected to attract a wave of fresh investors — both retail and institutional — by offering a regulated and familiar investment option for exposure to cryptocurrencies. This growth of interest could increase stability in the crypto markets, possibly influencing the price movements of Bitcoin and Ethereum in the region.

The timing of this approval is noteworthy, considering that the U.S. could also be on the cusp of approval of an Ethereum Spot ETF. If this proactive approach inspires other financial centers beyond the U.S. to consider similar approvals, it will palpably contribute to the global expansion and maturation of the cryptocurrency market.

Current Impact of Ethereum Spot ETF Applications on the Crypto Market

The buzz surrounding Ethereum Spot ETF applications is noticeably affecting the crypto market, particularly Ethereum's price and overall sentiment. Submission of new ETF applications to the SEC has coincided with an 

, pushing it to around $3,700. This uptick reflects the market's optimism and positive sentiment regarding the potential for easier access to Ethereum. However, the market has exhibited some volatility as well, with Ether dropping over 14% in a week in early April. 

Despite these fluctuations, there's a general expectation that ETF developments would significantly impact Ethereum's price dynamics, similar to what was observed with the recent Bitcoin Spot ETF approvals. Moreover, the recent approval of cryptocurrency ETFs has further fueled optimism and positive expectations for increased investment inflows and a broader recognition of cryptocurrencies.

To sum up, the current impact of Ethereum Spot ETF applications on the crypto market is marked by heightened anticipation along with some volatility. Ethereum's price is responding to changes in the regulatory landscape and the potential for broader adoption of cryptocurrency-based investment products.

What Will It Mean if an Ethereum Spot ETF Application Is Approved?

The approval of an Ethereum Spot ETF application by the SEC would mark a significant milestone for the cryptocurrency market, especially for Ethereum. Following are some of the potential benefits.

Drawing parallels to the earlier Bitcoin Spot ETF approvals, some pundits expect an initial surge in Ethereum's price following the expected announcement, reflecting renewed confidence and interest in Ether as an asset. Over the long term, Ethereum Spot ETFs could contribute to growth and stability, similar to the impact that Bitcoin Spot ETFs have had on BTC’s price.

However, there are key differences to consider. The SEC's cautious stance on Ethereum — notably because of its PoS consensus mechanism — could influence the approval process and subsequent market reactions. In addition, Ethereum's unique ecosystem, including its role in DeFi and 

, could lead to different market responses as compared to those following the Bitcoin Spot ETF approvals.

The potential approval of Ethereum Spot ETFs is a crucial turning point for the crypto market, promising easier access, increased investment and greater legitimacy. Although short-term price fluctuations may occur, the long-term effects could echo the positive growth recently witnessed with Bitcoin Spot ETFs, promoting a more mature investment environment for Ethereum.

Intermediate

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Ethereum Spot ETF Approval: Its Impact on Crypto Markets

Grayscale Investments has filed a registration statement on Form S-3 with the SEC to register shares of its Grayscale Ethereum Trust (ETHE) as part of efforts to uplist the trust to a spot Ethereum ETF on the NYSE Arca.

Daily Top Performer — Automata Network (ATA)

The SPX index is up 0.02%, investor focus on earnings and U.S. interest rates continues. The broader cryptocurrency market is down, with Bitcoin and Ether dropping by 3.78% and 2.41%, respectively in the past 24 hours.

Today’s outperformer is ATA, which jumped 8.9% after Automata launched Multi-Prover AVS on Eigenlayer Holesky Testnet to boost decentralized security.

Automata Network (ATA), founded in 2019, is a Web3 platform providing private web services for decentralized applications, focusing on secure, anonymous transactions and governance. Key features include a private voting system and MEV minimization to enhance user privacy and security. Automata's Multi-Prover AVS, which utilizes TEE Coprocessors to enhance security, is now available on the Eigenlayer Holesky testnet. This system employs the TEE Prover as a secondary security measure in decentralized systems. Operators, restakers, and developers are encouraged to learn more about this advancement on their website.

Check Out the Latest Prices, Charts, and Data of 

Grayscale Investments, the world's largest crypto asset manager, has filed a registration statement on Form S-3 with the SEC to register shares of its Grayscale Ethereum Trust (ETHE) as part of efforts to uplist the trust to a spot Ethereum ETF on the NYSE Arca. This filing follows NYSE Arca’s application and is a crucial step in the regulatory process required for offering shares continuously upon approval. The shares will not be sold until the registration is declared effective, and this offering is subject to the Securities Act of 1933. Grayscale emphasizes that the trust, not registered under the 1940 Act, involves high risk and volatility, is focused solely on Ethereum, and does not offer direct investment in Ethereum.

BlackRock's spot bitcoin ETF, IBIT, has significantly impacted the firm's overall ETF flows, comprising 24% of its total. Eric Balchunas, Bloomberg's Senior ETF Analyst, highlighted the fund's success during a panel on Hong Kong's newly approved spot crypto ETFs. Since its launch in January, IBIT has attracted consistent inflows for over 70 days, accumulating more than $18 billion in assets under management and becoming one of the most successful ETFs in history. The IBIT fund is second only to Grayscale's ETF in terms of assets but has seen remarkable trading volume along with other spot bitcoin ETFs, totaling nearly $230 billion.

Gamium, supported by Parachain Ventures, DAO Maker, and Mr. Beast among others, has its token $GMM listed on major exchanges with a fully diluted valuation of around $43M. The platform is promoting a beta points airdrop to reward early users, where participants can sign up and earn points through various activities like launching an MST, trading, daily logins, and referrals. Details on point earning and distribution are available in a dedicated blog post. However, potential users are cautioned to research due to the inherent risks associated with DeFi protocols and trading.

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Grayscale Files for SEC Registration to Convert Ethereum Trust into a Spot ETF on NYSE Arca

Sharky is a Solana-based lending and borrowing DeFi solution that utilizes NFTs as loan collateral.

Cryptocurrency lending and borrowing has always been a prominent niche of the decentralized finance (

) industry, championed by platforms like Aave (

). A much rarer variant of DeFi borrowing and lending is based on non-fungible tokens (

Sharky.fi, or simply Sharky, is a Solana-based lending and borrowing protocol that uses NFTs as collateral to facilitate the DeFi processes on the network. By putting up NFTs as collateral, users can borrow funds via short-term loans in Solana's native SOL tokens. For lenders, the platform is also a great way to earn high APY rates in just 7 to 14 days, while having their loaned funds protected by the NFTs.

Having established itself as the leader of NFT-based lending and borrowing on Solana, the Sharky project has ambitious plans to integrate two more highly popular crypto asset types — Ordinals and real-world assets (RWAs).

 (SHARK) is a lending and borrowing app on the 

 (SOL) blockchain that lets users provide NFTs as collateral to access short-term loans in SOL tokens.

 Lenders can view NFTs offered as collateral, and make loan offers secured by their preferred NFTs.

Although Sharky's public launch on the Solana mainnet dates back to April 2022, the platform operated without its 

, SHARK, for its first two years in the market. The SHARK token was eventually launched in mid-April 2024.

Using its innovative business concept, Sharky quickly established itself as the leader of NFT lending. According to the project’s team, Sharky has a 90% share of the NFT lending market on Solana and has issued more than 1.4 million NFT loans.

Following the recent launch of its SHARK token, the project aims to integrate additional crypto asset types in the future. These include 

 (RWAs). Another ambitious product type considered for future implementation on the platform is uncollateralized consumer loans.

As a lender on Sharky.fi, you can browse NFTs from a variety of collections offered on the platform and make a loan offer for potential borrowers. The collections available on Sharky include the platform's own 

 collection, Mad Labs, Solana Monkey Business (SMB), Tensorians, Namaste and more. Lenders’ offers are shown to potential borrowers on the platform, who then choose the best offer based on their borrowing needs.

The NFT provided by the borrower is used as collateral, and the lender makes their funds available in SOL tokens. Lenders earn interest on the funds, with the loan duration typically between 7 and 14 days. Interest rates, naturally, will vary depending upon on-platform activity. Usually, 

 for active loans range between 120% and 220%, though they can go up to 360%. As such, Sharky loans are an excellent way for lenders to earn some serious interest quickly. If a borrower fails to repay the loan in full, the NFT used as collateral is transferred to the lender.

For borrowers, the Sharky platform is an excellent opportunity to access SOL funds for short-term needs quickly and flexibly using their NFTs, rather than cryptocurrency, as collateral. The best part of the platform's borrowing mechanism is that you remain in possession of your NFT during the loan period as a borrower. While your NFT is used as collateral, its ownership isn't transferred to the lender while the loan is active. The ownership transfer may only happen at the end of the loan period if you fail to repay the loan in full.

Maintaining the ownership of your NFT allows you to keep using it on various DeFi and other apps for purposes such as staking or satisfying 

 eligibility requirements, among other potential uses.

Sharx is the platform's own NFT collection. One of the most popular collections used in Sharky's lending and borrowing operations, sharx is made up of 10,111 adorable shark characters. Purchasing a sharx NFT not only opens up borrowing opportunities but also entitles you to upgrade or boost your Chowder points, rewards that are used in Sharky's loyalty program. 

As a sharx holder, you're entitled to the airdrop of Sharky.fi’s governance token, SHARK, and you can also stake sharx to earn FISHY tokens.

The newly launched SHARK token is envisioned as the platform's governance asset, with a total supply of 100 million. As of the time of writing in late April 2024, only some specific details on the actual governance processes powered by SHARK are available. Thus, the token's actual use in on-platform governance is expected to be outlined in the future.

SHARK will be airdropped in two phases, with 4.25% set aside for the first phase and 3.5% for the second. Of the former, 70% is allocated to its community, with the remaining 30% is distributed to partner communities. Meanwhile, the second phase is held as a staking pool event with a lockup duration of 30 to 60 days exclusively for OG, new users and sharx holders.

 of Sharky. Unlike the brand-new SHARK token, FISHY was issued back in 2022 at the start of the platform's operations. FISHY can be earned by staking sharx NFTs, accumulating reward points and participating in Sharky's social media campaigns. The token can be used to boost sharx NFTs, which in turn can earn you additional Chowder points. FISHY also gives you access to NFT raffles and auctions held on Sharky.

The SHARK token can be bought on Bybit through a Spot pair with USDT (

). Additionally, you can also take part in Bybit's current campaigns for the token for the chance to grab a share of the 

, which includes a Token Splash event featuring 456,000 SHARK through Apr 30, 2024, 9AM UTC, and a Lucky Draw with 58,000 SHARK in rewards through Apr 30, 2024, 9:59AM UTC.

Lending and borrowing using NFTs as collateral is a novel concept that has earned Sharky leadership positions in this niche. As more platforms adopting this business model emerge, the competition in the field is likely to intensify. However, as of now, Sharky remains the absolute leader of the Solana-based NFT lending and borrowing market. 

As NFTs experience a resurgence in popularity following the post-2021 dip, DeFi solutions that make innovative use of these assets, such as Sharky, stand to benefit. Later in 2024 and beyond, we’ll likely hear more about NFTs being used as legitimate collateral in crypto finance — a new trend helped to no small degree by the Sharky platform.

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Sharky.fi (SHARK): The Decentralized Platform for Instant NFT Loans

Trading

Heikin Ashi shares some characteristics with standard candlestick charts. Still, it's different. But how does it work & is it beneficial?

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The Heikin Ashi chart is a technique used for seeing the price action with more clarity and less 

 Mainly because its calculation comes from the average pace of prices. Therefore, providing the opportunity to spot market trends clearly and eventually better predict the future prices.

The Heikin Ashi is reliable in the sense where it allows the traders to better translate the trends on candlestick charts. And help you to find good entry points through the displays of potential reversals or breakout. When applying the Heikin Ashi in crypto trading, it helps users to critically analyze the intense market volatility into valuable information. That’s also because it helps define and highlight the 

 with objectivity and provides a solid base to establish an investment commitment. 

In fact, if the Heikin Ashi patterns (such as wedges, triangles, and doji) are used in conjunction with the knowledge of the state of a trend, the results are quite impressive.

Here are the main concepts that will help you understand the Heikin Ashi candles. Perhaps, also some useful trading strategies using the Heikin Ashi to help you make your first pot of gold.

What Is the Heikin Ashi Chart in Technical Analysis?

Yes, Heikin Ashi sounds like Japanese. In fact, it is and it’s one of the oldest techniques developed in the 1700s to represent and visualize the market price data. Whereas the Heikin Ashi chart is a form of a graph that displays derivations of high, low, open, and closing prices of a cryptocurrency for a specific time frame used for 

The main difference that differs Heikin Ashi from the rest is it is used in how candlesticks are calculated and plotted on a chart. While the Heikin Ashi calculation of the OHLC prices will be detailed throughout this guide.

Besides the Heikin Ashi chart, crypto traders’ most popular chart types include the 

line chart, bar chart, and the candlestick chart

While Heikin Ashi is excellent to spot trends, Heikin Ashi must still be used in conjunction with other elements to unlock its potential. These elements include the price action (Heikin Ashi Patterns) and each of the candles’ behavior within the overall context. 

It turns out that Heikin Ashi candles by themselves don’t offer an edge. Therefore, they must be analyzed in the context of the general market trend.

Nevertheless, here are some aspects to give you an idea to fully comprehend the concept.

First of all, you need to know a Heikin Ashi candle has a body and an upper with or without a lower shadow (wick).

 with no lower wick represents a strong uptrend. However, suppose a lower wick starts to present. In that case, the upward momentum is likely to decrease. And it is possible to signal a price reversal or at least a correction in the price of any crypto assets.

On the other hand, a Heikin Ashi candle with a 

 with no upper wick represents a strong downtrend. Notwithstanding, just as in the previous scenario, if an upper wick shows up, then it is likely that the downward momentum is decreasing. Subsequently, a corrective movement or reversal could present shortly. 

If that happens, it represents a downtrend, and a group of green candles represents an uptrend. See the example below on the 30-minute time frame for Bitcoin against the US dollar, where both scenarios are presented.

The size of the Heikin Ashi wick can signal possible shifts in momentum. As a general rule, small Heikin Ashi wicks followed by wide-ranging wicks signal that the buying (selling) pressure starts to build up. 

In this case, as a crypto trader, you should look for a potential trend reversal. In the example below, we can see how the size of the lower wicks started to change. Notice how the Heikin Ashi 

 has a significantly larger wick than the previous Heikin Ashi candle wicks. That’ll alert you of a possible reversal coming later.

Before learning how to use Heikin Ashi, as we’ll show a step-by-step guide, you must first understand the patterns. Ideally, combining trends with patterns presented by the price action can put the trader’s probabilities in favor. Thus, some of the most reliable “patterns” are shown below.

Before you get confused about what is a 

, here’s a guide to deciphering the mystery. 

Generally, a Doji formation is when the price closes at the same (or relatively close) as the “Open Price”. The 

 mainly represents a lack of follow-through in the direction of the trend. So when this formation forms, it is likely that a reversal from the previous movement could come.

 to only trade this reversal pattern in conjunction with the overall market trend. Below is an example of the BTCUSD 30-minute time frame where the Doji is identified.

 represent a pause within the overall trend and could evolve into a continuation or a reversal. Of course, the long or short entry depends entirely on where the pattern is formed within the overall trend.

The triangle usually converges towards a middle point in its structure. While the break out defines where the momentum is likely to keep going.

In the example above, a triangle formation is presented on the daily chart of BTCUSD; see how after the price broke the upper limit (black arrow), it continued its uptrend defined by consecutive green Heikin Ashi candles.

Other common price formations are the wedges, which are classified as rising and falling wedges. The first one has a bearish connotation because it represents the lack of follow-through to the upside, so a corrective or reversal movement could likely come soon—for example, 

, and it has more chances of being successful if the underlying trend is robust to the upside. See the example below:

How Do Heikin Ashi Candles Different From Regular Candlesticks?

At first glance, the Heikin Ashi candles and the regular candles are indeed similar. However, on a closer examination, the Heikin Ashi chart presents a smooth price action where trends tend to be more consistent than the regular candlestick charts. That shows a significant advantage of Heikin Ashi vs. a standard candle.

In the example below, a Bitcoin chart against the US dollar (BTCUSD) in a 10-minute time frame shows how on the Heikin Ashi chart, the price presents blocks of consecutive red candles. Meanwhile, the traditional chart shows more alternation on its candles, sometimes red, sometimes green.

Practically, this smooth action on the Heikin Ashi Candles allows the traders to read in the market better. That’s because when any given asset is trending, the action is presented with blocks of green or red candles, for an uptrend and a downtrend, respectively. To simply put it in conclusion, it makes your life easier to identify when a market is trending or not.

Above all, with this information and some price action patterns (Heikin Patterns), the investor can build a trading plan to enter the market.

Heikin Ashi candles should be used with trend-following strategies. Ideally, crypto traders should use the candles in trending markets. When a cryptocurrency moves in a well-established trend, the candles will show all chart patterns and trends more clearly.

The Heikin Ashi candles’ values with the

prices are calculated based on the average price. In fact, the name Heikin Ashi in Japanese means Average Pace. So in the markets, this kind of charting represents the prices’ average pace.

The Heikin Ashi calculation of the prices is based on the following formulas:

By comparison, the standard candlestick chart has a much more straightforward calculation. The open, high, low, and close values are all taken as the cryptocurrency price changes over time. Another difference in the Heikin Ashi vs. candles calculation is those past candlesticks have no material impact on the formation of current candlesticks.

How to Use Heikin Ashi In Crypto Trading?

Essentially, it is vital to choose a market with enough volatility and liquidity so the trades can be placed. Of course, this works perfectly on the Forex market.

As the traditional market gets more matured, the room for profitability gets limited. Hence, many traders are turning their heads to cryptocurrencies. Today, the 

 is one of the most exciting markets. Despite the volatility, liquidity, and several brokers offering attractive investment vehicles to participate in this market, there are plenty of opportunities to profit from this market.

So, if you want to filter out some good trading opportunities, here’s how: 

It is important to identify the momentum in the market to place trades in favor of that momentum. In other words, apply a trend following approach.

Here the multiple time frame analysis plays a vital role because it will help us identify that momentum. In the next chart of BTCUSD on the 12-hour chart, we can see the break out of a triangle pattern with a green candlestick. Additionally, we can see two areas that can act as resistance levels (Blue lines). 

Check out this practical step-by-step guide on how to start trading with Heikin Ashi strategies:

Example of Heikin Ashi Chart Analysis  

First, identify the momentum on the higher time frame, for this example, we can take as the reference the previous image, where they break out of the triangle in the 

 in the BTCUSD gives us clues about the direction of the momentum/ trend (big fat green candle).

After the momentum has been identified, the idea is to look for a continuation of the 12-hour green Heikin Ashi candle, so we zoom into the 

 to look for follow-through. Those continuations can be framed under any continuation pattern, which could be a wedge or a triangle.

For this specific example, we have two possible entries after the break out of the triangles, the entries are the black dots, and the red lines are the stop-loss order where we anchor our risk.

It is also essential to highlight the two “resistance” levels. Bear in mind that if they don’t hold as resistance, they could fuel our long position because those are the pivot points where the short sellers are likely to have their stop-loss orders.

One option for the trailing stop is to trail based on the momentum of the higher time frame. In this case, when the candle closes below the previous one, this is the exit point (green dot).

The Pros and Cons to Trade With Heikin Ashi Candles

Everything comes with setbacks. Before you decided to try out this candle, here’s what you must know!

While things may be in your favor, but what if we tell you that the limitations are quite significant as well?

The truth is, sometimes, with the “classic charts” of candles or bars, some reversals can be spotted before any signal is given on the Heikin Ashi candles. This happens because the latter is created based on average prices, so in a certain way has a lagging factor in its structure. However, this is a minor disadvantage because you can perfectly play continuations and take advantage of the current trend.

So, what can you do to overcome the limitations?

One of the main mistakes many novice traders tend to make when using Heikin Ashi candles is the lack of multiple time frame analysis. That is because traders focus only on one time frame that could be in the middle of a sideways movement. 

Think about it, if you’re the trader that does that. It means when you try to play with the trend-following approaches, it’ll significantly decrease your chances of profitability.

Therefore, the best way is to look at higher time frames where momentum is present (big fat candles) and then go to a lower time frame to play continuation in the direction of that momentum. Usually, this momentum plays on the higher time frames can be found using the Heikin Ashi strategy. For example, look at the continuation of a triangle break daily, but the timing of that continuation could be taken on the hourly chart.

What Is Heikin Ashi Chart and How to Trade with It?

Grab Up to 5,000 USDT in Rewards

Grab Up to 5,000 USDT in Rewards