Hello all, over the past 6 months I have rekindled my affection for RENKO charts. we filter out the noise and provide a clearer picture of what price may actually be doing.
I have come to the conclusion that as great as a RENKO chart may look, there will always be pros and cons with this charting platform.
Here is my pro and cons list:
PROS -
- Less noise that candle stick charts
- Defines support and resistance levels clearer
- Easier to find charting patterns (Channels, wedges, flags etc)
- Ability to adapt the brick size to match trading styles (smaller bricks for scalping/larger bricks for intraday)
- If setup up on a 1min TF, we can use alerts at new brick levels to monitor new patterns.
- Wicks on a brick and be a great way to spot a reversal
- Im not that educated with wave theories, but they look easy to spot on RENKO (Shown below)
As shown this this image all above points can be clearly seen, But here comes the cons.
CONS -
- Multiple bricks may be printed before the end of a 1min amount of time is finished (or any other TF)
- Can be harder to get the exact entry point when live trading due to above con.
- Price may move xx amount before returning during the chosen TF, which can wipe a SL and then print on the chart that the move didn't happen (rendering backtesting a lot more profitable that live trading)
- Candles sticks chart highs and lows may be a lot further above or below the peaks of a RENKO chart.
(Examples of unprinted bricks during a selected TF, and a backtested vs live trade position)
The main cons to take away are primarily timeframe issues, and how the chart isn't what it seems when you backtest RENKO. you may see some really good entries and exits but the reality can be far away from it.
We could always move into the 5 second chart, but its just as noisy as a 1min candle stick chart and renders the simplicity of RENKO useless IMO.
So after trial and error with scalping RENKO charts, some profitable days and a lot of BE or slight losses. That career path is not for me. its too time consuming and stressful. (We have been in lockdown and work has dried up so I had the time to try scalping. Now everything is retuning to a slightly normal state and my main job is re-starting, I have to adapt back to less positions and monitoring the screen)
Here comes my solution!
I was looking into how we could use a longer TF with RENKO and what the outcomes would be.
Keep the smaller brick sizes but chuck them into a 1H chart. The results are interesting
The chart was showing incredibly clear movement from trend lines. Almost like the hard work has been done for you. The only problem is that when looking at the same period on a 1H candle chart we can see the cons of RENKO on a higher TF.
We can see how price actually move around a lot more than the RENKO chart has shown.
This gave me the idea to flip the scenario around, draw my trend lines, support & resistance on a candlestick chart and use the RENKO to gauge how the movement will play out. This will allow me to hold onto the larger trends without the candle charts making me feel like I should pull out early, missing the larger moves.
Now we get a better view of where to set my orders and when to pull out of them. The RENKO chart is showing the major moves whilst the 1H candle charts has been used to plot my lines. It may not look that nice on the RENKO chart but I now have a stronger vision of what price is doing while knowing where the real support and resistance is coming from.
Here is my current live positions from today. Close one short will a small loss and went long on a resistance cross.
I could hold for multiple days but my plan is to find one or two big moves a day and close them around and hour before the market closes (21:00GMT+1).
Set up some new lines the next morning or or end of the day, set my orders and let the rest play out.
Thank you for reading this if you have, this is my 1st thread.
I'm Always accept feedback to improve my methods.
I have come to the conclusion that as great as a RENKO chart may look, there will always be pros and cons with this charting platform.
Here is my pro and cons list:
PROS -
- Less noise that candle stick charts
- Defines support and resistance levels clearer
- Easier to find charting patterns (Channels, wedges, flags etc)
- Ability to adapt the brick size to match trading styles (smaller bricks for scalping/larger bricks for intraday)
- If setup up on a 1min TF, we can use alerts at new brick levels to monitor new patterns.
- Wicks on a brick and be a great way to spot a reversal
- Im not that educated with wave theories, but they look easy to spot on RENKO (Shown below)
As shown this this image all above points can be clearly seen, But here comes the cons.
CONS -
- Multiple bricks may be printed before the end of a 1min amount of time is finished (or any other TF)
- Can be harder to get the exact entry point when live trading due to above con.
- Price may move xx amount before returning during the chosen TF, which can wipe a SL and then print on the chart that the move didn't happen (rendering backtesting a lot more profitable that live trading)
- Candles sticks chart highs and lows may be a lot further above or below the peaks of a RENKO chart.
Attached Image
Attached Image
The main cons to take away are primarily timeframe issues, and how the chart isn't what it seems when you backtest RENKO. you may see some really good entries and exits but the reality can be far away from it.
We could always move into the 5 second chart, but its just as noisy as a 1min candle stick chart and renders the simplicity of RENKO useless IMO.
So after trial and error with scalping RENKO charts, some profitable days and a lot of BE or slight losses. That career path is not for me. its too time consuming and stressful. (We have been in lockdown and work has dried up so I had the time to try scalping. Now everything is retuning to a slightly normal state and my main job is re-starting, I have to adapt back to less positions and monitoring the screen)
Here comes my solution!
I was looking into how we could use a longer TF with RENKO and what the outcomes would be.
Keep the smaller brick sizes but chuck them into a 1H chart. The results are interesting
The chart was showing incredibly clear movement from trend lines. Almost like the hard work has been done for you. The only problem is that when looking at the same period on a 1H candle chart we can see the cons of RENKO on a higher TF.
We can see how price actually move around a lot more than the RENKO chart has shown.
This gave me the idea to flip the scenario around, draw my trend lines, support & resistance on a candlestick chart and use the RENKO to gauge how the movement will play out. This will allow me to hold onto the larger trends without the candle charts making me feel like I should pull out early, missing the larger moves.
Now we get a better view of where to set my orders and when to pull out of them. The RENKO chart is showing the major moves whilst the 1H candle charts has been used to plot my lines. It may not look that nice on the RENKO chart but I now have a stronger vision of what price is doing while knowing where the real support and resistance is coming from.
Here is my current live positions from today. Close one short will a small loss and went long on a resistance cross.
I could hold for multiple days but my plan is to find one or two big moves a day and close them around and hour before the market closes (21:00GMT+1).
Set up some new lines the next morning or or end of the day, set my orders and let the rest play out.
Thank you for reading this if you have, this is my 1st thread.
I'm Always accept feedback to improve my methods.