Renko Charts. Every Technical Trader Needs These

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Hey Everyone, my name is Kelton and I have a few posts on here already that have gotten a little attention but I needed to start a thread about Renko Charts and make sure everyone is informed on the power of Renko Trading.

[B][I][U]First of what is a Renko Chart?[/U][/I][/B]

[B]A[/B]: A type of chart, developed by the Japanese, that is only concerned with price movement; time and volume are not included. It is thought to be named for the Japanese word for bricks, “renga”. A renko chart is constructed by placing a brick in the next column once the price surpasses the top or bottom of the previous brick by a predefined amount. White bricks are used when the direction of the trend is up, while black bricks are used when the trend is down. This type of chart is very effective for traders to identify key support/resistance levels. Transaction signals are generated when the direction of the trend changes and the bricks alternate colors.

[B][I][U]What is the benefit of using Renko over typical candle sticks?[/U][/I][/B]

A: Some of the advantages to Renko vs Typical Candle Sticks is that there is no wicks on a Renko Chart. But the main benefit is it filters out noise.You can see clearly the support and resistance levels and what price is actually doing inside a candle stick.

It’s important to note that prices may exceed the top (or bottom) of the current brick. Again, new bricks are only added when prices completely “fill” the brick. For example, for a 5-point chart, if prices rise from 98 to 102, the hollow brick that goes from 95 to 100 is added to the chart BUT the hollow brick that goes from 100 to 105 is NOT DRAWN. The Renko chart will give the impression that prices stopped at 100.

It’s also important to remember that Renko charts may not change for several time periods. Prices have to rise or fall “significantly” in order for bricks to be added.

[B][U][I]Why I use Renko vs Typical Candle Sticks-
[/I][/U][/B]
I am a technical trader just like 90% of traders. So why are all the traders not using a chart that is all based
on price? Price is what we follow and try to interpret, so we should use a chart that allows us to do so.

Also since you can set your Renko Chart up to what ever pip size is wanted you can either scalp or swing trade and your losses will be less because of the nature of Renko charts. Odds are you will close your trade before you get stopped out because you had a signal to close well before price was able to hit your stop.

Isn’t this

Much more simple than this

Thanks for reading everyone! Let me know your thoughts or questions!

Best Regards,
Kelton W.

3 Likes
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I have moved to Heiken Ashi for the same reason.

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Hello Kelton ,
The idea looks interesting, specially it filters out noise.
Let me add one more benefit, Because Renko is plotted due to price behavior, it is not important what the broker GMT offset is (Candles from brokers that are not in same timezone, are different).
I think Renko is useful for those that look for Price Actions.
however, I am a little confused how Renko is calculated.
Is there any specific tools to produce Renko (Indicators,…), I would like to test Fib and Trend line on a Renko chart?
How indicators like Stochastic, RSI, … works with Renko chart?

Regards,

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Interesting idea but few things that would work against you if you used these charts:

  1. those wicks tell a huge story by themselves. A pin bar (hammer) with S&R and other confluences can move the probabilities greatly in your favour
  2. you filter out noise by moving to higher time frames eg daily
  3. without time, you are driving a car blindly. Not knowing what price did yesterday, last week is a big plughole to trading

Would be interesting to see an example of a trade that worked using renko charts instead of the Japanese ones …

1 Like
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Are these two plots from the same pair and time period?

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In Renko still you can see wicks, and it gives clear picture for support and resistant lines. Also there is indicators shows how long it takes each brick to be formed, this gives an idea about support and resistant and consolidation as well.
I’m very interested in Renko charts, but still studying it. In fact I’m trying to utilize it to gain 10-20 pips/day

usdchf_renko_20.jpg700×381 25.7 KB

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I share your pragmatic response, because you cannot rule out price history. But if these basic features can be incorporated/clarified, it might be a welcome development

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Your first Renko chart didn’t have wicks, now this was does … next you’ll pull up time … before you know it, you’ll have your old candlestick chart. In any case good luck with this, I’m sticking with candlesticks but will keep an interested eye on this thread.

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The problem is that there are not many software providers offering renko charts. I know prorealtime (com) which is free (at least for daily and weekly charts).

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I still dont understand it, can anyone give a good explanation on Renko bars? What is the difference of Renko bar for daily and weekly chart(example)? Since Renko bars ignores the time frame, shouldn’t the daily and weekly cahrt be the same if i set my tick range the same too?

Example, if i set my tick range for 10 pips for weekly and daily renko bar chart, shouldn’t it be the same too?

Thanks a lot if someone can reply my queries.

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Hi Everyone,

Well, I have been trading for a while and personally prefer candles - whilst price IS important of course, 1.You still see it on candle charts and 2.The rate at which price moves is a vital ingredient to trading success imho - I mean if a 4 Hour candle ends a doji - you know that there is a true stalemate and if you get a long bullish candle at m30 you know there must be some serious support and momentum for price to achieve that…

On a closing note - For those saying it is not offered - You can get an mt4 plugin for free which creates Renko Charts so everyone can have them if they want (on mt4 at least!)

Oh and with regards to the comment about different broker times and candles - there is a plug in for that also which means you can ‘shift’ your candles so they become, for example, New York Close candles!!

p.s.
Just google: mt4 period converter for the time shifting and for the Renko plugin, ‘renko bars for mt4’

Hope that helps guys & gals!

morpheus69

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Hi,

Another dead renko thread. Just want to add my 2 cents worth. If you trade only brick color changes you will end up with a 2:1 risk:reward ratio. This means you will need to have a nice win ratio… (somewhere around 70%-80%?). Also, ranges will create a huge drawdown.

Apart from this, my main observations are:
You should have a respectable brick size, say 20 pips.
Draw trendlines on your renko charts! By trendlines I also mean S/R levels.
The breakouts are a lot more reliable this way. There will be fakeouts but a LOT less.
This is because there are fewer S/R levels on renko charts. Which ever levels you see (swing lows/highs) will either hold true, or if broken will at least give you a respectable 1:1 RR ratio.

PS: If you decide to trade each and every brick then it is advisable to enter after a retracement. This can greatly improve your RR thus improving overall profitability. This is conservative type of trading and may keep you out of a few trades, but its worth it.

These are just my observations. Please do not be hostile, I’m here to learn. :slight_smile:

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Renkos always look perfect in offline mode when the history is generated, but when the bars form in real time they are a lot more volatile.

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For day trading, use renko 5 pips, daily pivot,and RSI, observe for a week, a month if you like, once you get the rhythm, trade, and you’ll never return to timeframe chart.

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I find Renko very usefulful for identifying trends. I follow trends and resistance/support levels to know what is haooening at the instant time of observation.
Yet I know there is more to be learned. I find certain patterns useful. Double testing of a support line of a rising field, e.g. show an upcoming trend down. I am sure there are more.

I am currently trading USD/NOK with a 10 pip Renko and a 1 min time chart. This has been very profitable, but incurs great risk and I would like to refine my trading.
r

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Is there any specific tools to produce Renko (Indicators,…), I would like to test Fib and Trend line on a Renko chart?
How indicators like Stochastic, RSI, … works with Renko chart?

There are a few around, but most of them I found to be annoying because you end up having so many charts open just to get the Renko chart you need.

For example:

If you want eurusd, gbpusd, usdjpy Renko charts, you need to attach a converter script onto those charts to create the Renko ones. So you basically “double up” on the charts open and it makes a messy work space.

I really like The Forex Guy’s chart generator - you can tell it what type of Renko charts you want from what pairs and it generates them all from one panel.

Mt4 Custom Time Frame & Renko Chart Generator

this is a renko chart i made, and the tool is easy to use…see below

renko.jpg700×284 19 KB


custom charts.jpg700×283 24.9 KB

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It’s nice and I like “the forex guy”, too. But you have to sign up to the “war room” to use this tool, which will cost you 249$. If you just want the tool and are not interested in the price action course and so on, this might be a bit expensive.

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Have you looked at median or hybrid renko? What are your thoughts?
Thanks,
margot

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I have struggled for about a month and think I read all the net offers, my frustration has run over at trying to get renko charts going, singularly unsuccessf can you help me?

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Hi SnrTrader,
let me know what you need.
A renko chart creator? You use Mt4?

Best