Renko 10

Trading Systems Free Forex Trading Systems
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We are the guerilla grunts of the Forex industry. All the little guys and girls on a handful of forums searching for a way to glean a few crumbs from such a massive exchange really don’t add up to much and don’t attract much high-level professional interest. It is unlikely that a sucessful trader currently managing a closed account, officing in a downtown New York highrise, and with the use of wide-range technology functioning in nano-seconds is going to be contributing much on BP. More than one pretender has come and gone on this site and others and prompts us to be especially appreciative of the genuine professionals who do make contributions. I’ll tell you, I have read some posts so intelligent and knowledgeable I was left in the dust.

A rag-tag group of rebels, mostly noobs, poorly armed, accompanied by a smattering of capable officers, what makes us think we can get in this and hope to win? No offense to you Brits, but didn’t something like that happen a couple hundred years ago? We have a chance because there are inherent advantages in guerilla warfare. Our assignment is not to beat the amassed troops, but merely to take and hold a small section of ground. We don’t have to win the war, just our own little battle. For most of us, the notion of working from home in our pj’s at one or two pc’s with maybe a calculator and scratchpad is infinitely more appealing than stepping into a three-piece suit and taking the subway downtown. I like the Cadillac commercial reminding me that HP, Apple, Amazon, and the Ramones started in a garage.

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I really enjoy your posts pipwoof.

My account was at its most profitable when all I took was one trade a week. All I did was wait for a currency to be down against all others and pair it with a currency that is up against all others. It doesn’t often happen but when it does all one has to do is hop on to the trend.

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As we explore Renko, it occurs to me that thoughts will emerge in categories. I can think of a few and there may be more.

  1. Using the bars and charts. This is naked Renko. We are asking if there is anything predictive in the charts themselves. This is like looking at that red/black business. Is there an edge there or in some variation we might come up with. I have some remaining efforts to make on this and will toss 'em out there when I get a little further.
  2. Combining Renko with something else. This is what tyrone, darklighter, and others suggested early on. What if we paired Renko with some other tool? Would we find our honest advantage? I believe this area might be productive. We can start by simply throwing some of our favorite indi’s, templates, patterns, whatever you have, on top of a Renko chart. See anything?
  3. Serendipity is the fortunate unexpected discovery. Just by stimulating our thinking, we may stumble across something that wasn’t part of the original plan.
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Thanks for the compliment, useful. Obviously, I am not going to be one of those who insist that every post be about Renko. Especially, if you are on to something and have a bit of empirical data/experience to back it up. You know, if we end up having to abandon Renko, we will want to go to something else and maybe we will already have a heads up about what that might be.

Regarding the quote above, I started out trading futures. We struggled and, though there were a dozen of us, some pretty sharp, we never achieved that smooth equity curve we all dream about. Maybe it was just us. Our trading year typically consisted of mixed-emotion positions, ups, downs, wins, losses, and a constant concern of whether we would be able to bear our share of business and domestic financials and have an account left for next year. Interestingly, we always seemed to find one or two trades that bailed our butts out and allowed us to continue. We would be right in the middle of a 30-50% drawdown and some government agency would issue a report on the dangers of nitrates. The bottom would drop out of the pork market and we would be short live hogs. Some middle-eastern country would get invaded and we would make our year long oil. We didn’t want it to be that way and we still hope it won’t be that way in Forex. I continue my association with some of those guys. We work both together and apart on different things. BTW, they do not share my position on sharing, so my apologies, I can’t offer anything we have arrived at by partnership or collaboration. No matter, you probably wouldn’t want it because our equity curves still look like Appalachian dental work and we are as far from the grail as DeLeon was from the fountain of youth.

Though, if I stretch it, I can claim some marginal success with trading, i.e., my winnings are momentarily ahead of losses, I would love to find that thing resulting in smooth and steady growth. I would like to find it in an open source environment where I can damn well share it if I want.

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Why not? You can’t be any dumber than me on this subject. As Mickey said to Minnie, “Squeak up!” LOL, just kidding. Hope people can take my sometimes twisted sense of humor here. Lips, glad to have you. Post when you want and ask questions when you need. Transparently, I enjoy this and the computer behind me, the one to my left, or the one in front of me will take me away when they need my attention.

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It may have been Doris Day who said to Rock Hudson, “Let’s monkey around with Renko.” He didn’t know Renko, so had his reservations about the arrangement. But, we are going to monkey around with Renko.

I know at some point we will be tossing around r/r, w/l, and the notion of continuums. If you are a total newbie, r/r just refers to your ratio of risk to reward on a trade and w/l refers to the number of winning trades you have over the number of losers. A method with a favorable r/r can be profitable even with a bad w/l, or the other way around. For the most part, these measures seem to operate on a continuum where what you gain in one, you give up in the other. Of course, if you come upon a way to have both favorable, you will not have to trade. There will be plenty of us who will buy it from you and you can move to Maui.

These numbers are often derived from testing, which we are severely lacking. Other times, they are a product of inference or speculation. Since we will be working with small samples, our results will be mostly speculative. If you have any questions as we proceed, ask, and someone will try to help.

With Renko, we have observed a probability for bars of the same color to appear in succession. However, just before we jumped on that observation like a duck on a june bug, we noted the downside. Because Renkos of the opposite color appear only when price has moved 2x the size of our Renko box, we find ourselves in a 2/1 r/r. Not good, unless we think we could hit about an 80/20 w/l. Not gonna happen.

Well, I know a quick way to get us to a 1/1 and a way to get us to possibly better than that and maybe I can delegate some of this tedious looking back to see what happened. The 1/1 is simple. We don’t wait for completion of an opposite color bar. We enter in the direction of the completed bar, set both a stop-loss and a take-profit at the box-size. Ten-pip Renko = 10 pip sl and tp. We can quickly see that the smaller Renko doesn’t seem to work. With a 10-pipper we would be stopped out way too often to be profitable. But, what about 20, 30, 40? And, what about not setting a tp? Let profits run and move our stops. We’ll just have to look into it. I think we can count on the fact that, the larger our box size, the fewer boxes of the same color will appear in succession. This is naked Renko, using only the bars. To find an edge here, we would hope to find the right combination of variables. Box size, time, entry,sl, tp, maybe more. EUR/USD, I am leaning toward a 30 or 40 pip box and some kind of trailing stop.

Before you spend too much time looking in this direction, I can tell you that I am already moving toward adding tools to naked Renko, so he won’t be naked anymore. Like so many other approaches, if one part of this can give us direction (trend), another part can give us entry, and we can find an effective exit strategy, we may get something out of this.

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I enjoy reading your posts pipwoof! I think I fixed my tester ea. I made it draw a line every time it counts a loser so I could visually inspect what was going wrong. I’m pretty sure I got it right this time. Here are the results.

Going with direction of 25ema. If one goes against us wait for price to reverse back to ema direction

3 year data: GBPJPY,30pip box: WIN = 1985 LOSS = 764
3 year data: EURUSD,30pip box: WIN = 1282 LOSS = 511
3 year data: EURUSD,20pip box: WIN = 2997 LOSS = 1168

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While this seems to be a slight edge, enough to make money off of, it would be awesome if we could get something better. Lets see what we can come up with.

If you are wondering why I’m not using the strategy tester to put in actual test trades that give all the pretty stats and graphs, its because Renko trades can’t be tested in the strategy tester. Well, they can, but the results are rubbish because when the boxes change direction the open of the box is not truly where it opened (the open that you see on the chart is the box size in pips higher or lower than the true open). The strategy tester doesn’t know that though so every win happens too soon, and losses are cut in half or avoided all together. I have to do it like I did here which should be plenty good enough to let us know if we are on the right track and want to test something live.

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Though not an mt4 programmer, I could tell that writing an ea was going to be trouble with this. We would probably have to drop the Renko perspective and write something having to do with round-number price points. At this stage, that sounds like a lot of work that might not pay off. I think you are right that your semi-manual method will give us some direction and if we can get a few sets of eyes on this, it will help. Thanks for appreciating my comments and thanks for your hard work here.

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darklighter, just so I understand… You are applying your original premises, a 15 pip box and a 25 ema. The ema would function as our directional filter (trend) and the completion of a Renko box in that direction would be our entry signal. Therefore, we would always be entering in the direction of the overall trend. Are you counting winners as the completion of a same-color bar?

This is terrific groundwork and opens possibilities for us to look at endless variables. 5 pip box, 14 ema, 40 pip box, 21 ema, etc. Then, we get into trade management and effective exits. I don’t know if you’ve had time to think that far yet, but I have to believe we will come up with a satisfying entry method.

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[QUOTE=pipwoof;620595]Why not? You can’t be any dumber than me on this subject.

Au contraire, mon frère! But I am just like the vast majority of forex traders that have tried in a plethora of ways to make money in Forex to no avail losing half of my initial deposit to date. All I have been doing lately is testing different things that I have come up with in my own head. Mainly using Daily Pivot points taking small short term profits. I have a pretty high success rate of hitting my target but because of the large SL and small TP when the SL is hit it wipes out a lot of the TP’s. This problem is no different than a lot of the other systems that have been dreamed up.I feel you are a lot like me who realize that what you need is an edge but finding that edge is like finding a needle in a hay stack. I wonder to myself is it really possible to find that edge? Well I’m not sure, but as of right now I haven’t given up trying. That’s why I appreciate what you are doing and I agree with a lot of your opinions and thoughts on forex and trading and your willingness to share them to us. I also like your sense of humor too. We will keep digging and maybe we’ll someday dig up the gold nugget of forex.

Cheers,
PL

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Let us look at forex from a philosophical view point.

Price must sooner or later trend otherwise price would never rise or fall.

Example: eurusd. Price is at 1.3700 and it rises 100 points to 1.3800. Logic dictates that it will hit 1.3900 before it will hit 1.3700. If price does go to 1.3700 before 1.3900 then it is more likely to go to 1.3600 before it goes to 1.3800.

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My empathy extends to you and many others in your shoes. You know, the published indications are that a high percentage of traders lose money, some say up to 90% or more. We have to assume that most major players, bank funds, account managers, etc., are successful or they wouldn’t be able to hold on to their clients and their jobs. That leaves an even higher percentage of us guerillas who must lose. But, since we really don’t have all that much, relatively speaking, I have to wonder who really is losing all this money?

BP and other forums may attract a more savvy trader than the average Joe walking blindly toward the airplane propellor, but, by inference, there would still be a high percentage of losing traders on these sites. And, by further inference, that would mean that most of the systems, methods, ideas presented here are losing propositions.

I have been struck by the number of methods proposed with no results information. Maybe a screenshot or two of when it worked and, if the author is being generous, one of when it didn’t. Do this, use this, but what happened when you did? Backtesting, forward testing, even small samples or anecdotal information would help us decide whether we are on the trail of something workable. I have to say I appreciate the efforts of RoboPip and some others who try to quantify the results of some of these trading approaches.

When something is offered, unless it is framed as a work in progress, I think we reflexivley assume it is being offered because it works. When it doesn’t work for us, it is all to easy to conclude that, “The fault, dear Brutus, is not in our stars, but in ourselves…” In the business of trading, the fault is sometimes in ourselves, but, more often, in these inherently faulted approaches.

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Per darklighter, this is a shot of 15 pip Renkos accompanied by a 25 ema. It covers about a month from early Feb into early Mar. This is a very unrefined look at what we might be trying to discover. Much would depend on whether our protective stops cover the price excursions and keep us in the trade. More would depend on how we chose to exit. In general, we might be looking to take a long at the close of a blue bar above the ema. Or, the close of a red bar below the ema for shorts. Grossly observed, a single bar would be a loss in all cases. Two consecutive bars might be turned into a be or small loss. Three or more consecutives can likely be made into winners, the amount won depending on how far the run continues. Of course, ma’s are not the only filters we might consider. This is just a start.

eurusdm2,4-14.jpg700×222 28 KB

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eurusdm2,5r,4-14.jpg700×222 19.8 KB

And, this is a 5 pip Renko sharing the chart with a 25 and a 14 ema. This shot covers a couple weeks in Feb. This would be kind of scalping, but we do notice much longer consecutive runs because of the small size of the boxes.

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And, here is a Renko 10 with a couple of other toys I like to mess with sometimes. They are included in the attached zip.

eurusdm2,with indis,4-14.jpg700×222 29 KB

Renko 10.zip (21.8 KB)

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I think it would be really difficult to trade on a 5pip box, even for an EA. I have seen the market move 5 pips incredibly fast even on non-news hours.

Here is a picture of what I was testing. Arrows represent long trades that would have been taken at the open of the brick and closed at the close of the brick. Red lines are where losses would have been incurred.

eurusdm15.jpg700×255 20.5 KB

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To increase the rr, instead of buying at the close of a new green box, one could put in a ‘buy limit’ order at the open of the new green box with the stop loss at the open of the prior red box.

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Just noticed this little gem at the bottom of the site:

"We learn wisdom from failure much more than from success. We often discover what will do, by finding out what will not do; and probably he who never made a mistake never made a discovery."
Samuel Smiles

Read more: 301 Moved Permanently

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If I understand that correctly, I don’t think it would work because most of these boxes actually have wicks. So the buy limit could be triggered on the start of a new green box but the price could very well reverse and never complete the green box. I’ll start posting all my charts with the wicks included so its more clear.