What Is Renko Chart Trading?
Renko chart trading is a method that focuses on the unique characteristics of price charts. What makes these charts and this style of trading unique? Unlike traditional bar and candlestick charts, price charts do not use time intervals or volume.
Instead of time or volume, trading is done with Renko bricks made from predetermined settings. Since the setting size does not change on the chart, all Renko bricks are the same size.
Compared to traditional charts, price charts can give a clearer read of price movement, which is a benefit of Renko chart trading.
As a trader focusing on price and momentum continuation, I do not care about time frames. I like the visual symmetry and clarity of having bricks the same size. The charts are simpler to trade by seeing consistent price movement and patterns. Minor moves that are smaller than the brick settings are filtered.
- What Is A Renko Chart And Making Renko Chart Bricks
Look at the Renko charts below, compared to a candlestick chart with a time interval of 5 minutes. You will see examples of what intrigued me with Renko chart trading.
Renko Trading Charts Compared To Candlesticks
Why use Renko charts for trading?
In this first example, you are looking at 2 hours. Both of the charts have about the same number of bars or bricks.
It is clear how structured and concise the Renko bricks look on the chart. Although the candlesticks may show the general up and down direction, the price movement is not as distinctive.
This is especially the case where you get to the period of numerous overlapping bars followed by the downward reverse. This kind of price movement seems random and hard to apply trading strategies to.
Consider a Renko chart trading strategy, where after a set number of consecutive red or green bricks, you would buy or sell the next counter brick. While you could apply this strategy to this Renko chart, you would have no way to see similar setups using the candlesticks.
Unlike the first chart, where both charts have about the same number of bars and bricks, there is a big difference during the time interval for the next 2 charts.
Look at how many more candlesticks there are than Renko bricks in these 3.5 hours.
This is another example of the clarity you get from Renko charts, especially during sideways moves or periods of small price movement.
You will continue to get new bars [every 5 minutes on these charts], while a new Renko chart brick won’t complete. For instance, there are Renko bricks that were completed in around 1 minute, but there are also bricks that took over 15 minutes to be made.
I have found this characteristic of price charts where minor price moves are not seen to be an advantage for Renko chart trading.
Renko Chart With Indicators
The Renko chart now has my indicators with the yellow circles showing the Renko setups during the period.
I will further discuss these indicators and trade setups along with the method basics for learning Renko chart trading in the video below.
Among other information, you will learn why I think that the best indicators for trading Renko charts are momentum indicators. Each one of our 3 trading indicators is based on momentum resumptions or momentum reverses:
- The Best Indicators For Renko Charts
- Renko Momentum Trading Indicators
- The Best Renko Indicator For Trading Is Momentum
Learning To Trade Renko Charts
When learning Renko chart trading, think of a method and not a mechanical system. You will not be trading indicator signals.
You will learn how the Renko indicators are components for trade setups but also learn filters for avoiding trade setups that should have lower odds of success.
For instance, consider the example of a basic Renko trade setup called the price envelope reverse. This setup is easy to see on the chart:
- The price envelop indicator will reverse its dot color and either shift to red on the top or green on the bottom.
- The slow momentum indicator [blue-purple lines] will also cross in the direction of the trade.
But also consider that the setup is right into a support or resistance price. You would filter the Renko price envelope reverse for the trading price, and the trade would not be made. Besides price, you will learn to filter trades for momentum and market consolidation.
Click the link below for a video discussing these charts and the outline. You will also find a link for learning more about our Renko position trading method for the SPY and QQQ ETFs using options.
Video: Learning Renko Chart Trading
Renko Position Trading With Options
Renko Chart Trading Training
The Renko chart trading training will focus on learning all aspects of the Renko method.
As discussed in the video, this will include learning the Renko trade setups, using the Renko trading indicators and trade filters, and managing the trades. The training is done with videos discussing Renko charts and trades; there are typically two new member videos each week.
The Renko trading group training is $55/month on a recurring basis. You will have access to all member training content for Renko chart day trading and position trading with options. Additionally, you will receive the Renko trading indicators discussed in the videos – these indicators have been coded for NinjaTrader.
If you have any questions or would like more information, email me at support@renkocharttrading.com
Join the Renko Chart Trading Group
