Renko Price Chart
The Renko Chart is a type of chart that plots only selected pip-movements by eliminating the impact of time.
What is the Renko Chart?
Renko comes from the Japanese word Renga which means brick. This type of chart is valuable for Swing Trend-Traders and Long Trend-Traders but not for common Day-Traders. The Renko Chart plots only selected pip-movements by eliminating the impact of time.
How a Renko Chart Works
Any price level plotted on a Renko Chart is based on a minimum pre-specified pip movement no matter the time.
Setting the Brick (pip movement)
The smaller the pip size, the more movements will be shown on a Renko Chart. On the other hand the larger the selected pip size the less movement will be shown.
◙ Usually, Forex Traders use ‘bricks’ between 3 and 16 pips but others may use bricks even 100 pips
◙ Stock Traders use usually ‘bricks’ that count 1.0% of the price of the stock
Renko Chart Features
These are the main features of Renko Charts:
(1) Renko Charts are similar to Range Charts and are used for the early identification of changes in the general market sentiment
(2) A Renko Chart updates tick by tick
(3) Renko Charts are used for the elimination of the market noise by excluding minimum price changes
(4) A Renko Chart bar can be opened and closes in 1 hour or in 5 minutes
(5) Traders can select the minimum size of the pip movement that it will be shown on the chart
(6) More bars are plotted during high-volatility days and fewer bars during low-volatility days
What a Renko Charts can Show
Renko charts are used for the early identification of changes in the general market sentiment and may:
1. Identify trend and reversals
2. Identify support & resistance
3. Generate Long / Short trading signals
Median or Mean Renko Charts
A Median Renko chart is the same as any other Renko Chart except the fact that each bar’s open is found in the Middle point of the previous bar and not in the High / Low point.
Trading Platforms and Renko Charts
Forex traders can easily use the Renko Charts in the NinjaTrader and TradeStation Platforms or in the MetaTrader-4 via addition of software.
» Forex Renko-Brick Strategy for $37
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◙ Renko Chart
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