Heikin Ashi Candlesticks: A Smoother Perspective on Market Trends…
Unlike traditional candlesticks, Heikin Ashi applies a modified formula that averages price movements, helping to filter out noise and highlight trend direction.
🔹 How We Use Heikin Ashi?
Rather than use Heikin Ashi for short-term stock trading (our Firm believes in a longer-term “buy and hold” investment strategy), we use Heikin Ashi to aid us in covered call writing. Of course, we don’t rely exclusively on this tool. But, we have found it helpful in our overall decision making process. Some benefits over traditional candlesticks that we have noticed…
✅ Trends Are Easier to Spot – The smoothing effect reduces choppiness, making it clearer when a trend is strengthening or weakening.
✅ Better Covered Call Writing – Writing a covered call only to watch the underlying stock price move upward is disappointing. Heikin Ashi helps us avoid this situation by pointing out trend reversals to the downside. This helps increase our chances of maximizing the premiums we collect for our clients.
💡 While not perfect for precise entry/exit points, Heikin Ashi can be a useful tool for confirming trends and reducing emotional trading decisions.
Choosing how to manage your wealth starts with understanding the key differences between a bank savings account and an individual brokerage account.
An FDIC-insured bank savings account is designed to keep your cash secure. While you can earn some interest—especially by placing funds in a Certificate of Deposit (CD)—these accounts generally offer low returns and impose penalties for early withdrawals.
In contrast, an SIPC-insured individual brokerage account allows you to deposit cash just like a savings account but also provides access to a wide range of investment options, including stocks, bonds, options, futures, and forex.
If your goal is to achieve a higher return on investment (ROI) than a typical savings account offers, a brokerage account may be a better fit. However, with the potential for higher returns comes increased risk. Understanding this risk is essential when shaping your financial future. An investment advisor can help assess your financial goals, risk tolerance, and time horizon to determine the most suitable investment strategy—one that likely offers greater growth potential than a bank savings account.
The term “individual” brokerage account distinguishes it from retirement accounts such as Traditional IRAs or Roth IRAs. With an individual brokerage account, you invest using post-tax dollars, and your advisor manages these funds by investing in various securities. Any profits you take are subject to capital gains tax, and as with any investment, there is always a risk of loss.
The table below provides a general comparison of these two account types. After reviewing it, feel free to reach out with any questions or if you’d like to further explore if an individual brokerage account is right for you.
Table: Comparing the Features of a Bank Savings Account and an Individual Brokerage Account
Feature
Savings Account (FDIC Bank)
Interactive Brokers (IBKR) Individual Account
Purpose
Securely store cash & earn interest
Invest & trade securities (stocks, options, etc.)
Insurance & Protection
FDIC-insured up to $250,000 per depositor, per bank
SIPC-insured up to $500,000 ($250,000 for cash); does not protect against market losses
Risk Exposure
Low-to-no market risk, but subject to inflation erosion
Exposed to market risks—investments can fluctuate in value
Interest Rates & Returns
Low interest (0.5%-5% annualized)
Higher interest on idle cash (above a certain threshold) & potentially high investment returns
Liquidity & Access
Funds are easily accessible (liquid), but may have withdrawal limits/penalties (e.g., 6 transfers/month)
Withdrawals take 1-3 business days, and investments must be sold first (liquidation)
Market Exposure
No exposure—funds remain in cash
Fully exposed—securities can gain or lose value
Borrowing & Margin
No borrowing or margin trading
Margin trading available, allowing borrowing against investments
