Using Renko Charts to Trade Forex - Does It Really Work?

Using renko charts to trade forex has been regularly discussed on forums over the last few years. They're similar to bar charts, the primary difference being that they are not based on time.

On a traditional price chart, an hour candle will form every hour, regardless of how far price travels. On a renko chart, a new bar will only form when price moves a predefined amount. As an example, if a trader inputs a setting of 40 pips per bar, then a new bar will only form every time price travels 40 pips.

Forex Trading Pip

The primary benefit of using renko charts is that they eliminate a lot of "noise." They are able to display trends more clearly by eliminating the traditional bars that form on a time basis. In this way a trader can spot emerging trends without having to strain his eyes, or his brain. When a new bar forms below or above the previous price pullback, it could potentially indicate a continuation in trend.

As beneficial as these charts may seem, a trader is still required to know some technical analysis basics. Surprisingly, renko bars exhibit similar characteristics to regular price bars. Having a knowledge base of price patterns, support and resistance lines, and trend channels can be beneficial when trading renko bars. The more experience a trader has with technical analysis, the more they will be able to truly reap the benefits of renko charts.

Having a solid trading strategy still applies. Using renko charts will not spare you the need to protect your account from risk, and from having to make good trading decisions. It is critical for a trader to utilize a profitable forex trading strategy in order to make money. Having smoother looking charts can ease some rough spots, but only to a point. Getting situated with the right money management techniques, and trading strategy will fill in the rest of the blanks.

Using Renko Charts to Trade Forex - Does It Really Work?

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Renko Charts - Which Box Size Is Best for Trading Forex?

The most frequently asked question in the field Renko charts: box format should I use? In this article I will explain why the only honest answer I can give is: "It depends."

But it will initially only be guaranteed to make sense of this article, let me briefly explain how to work Renko charts. Renko charts use a candle "flexible" or box size you choose when you load the indicator on the chart.

Forex Trading Pip

As the price moves in your number of cores, a new blue (bullish) candleto form. However, when you open a new candle (we say that the box is 10 pips) and then closed 20 pips lower prices, a new red (bearish) candle. This is because the price is 10 pips in the last is near or below the hole to look up for a new box and close to your charts.

Renko charts makes it so attractive to so many retailers ... the lack of wicks and the absence of many candles, they can not go anywhere, but driving your various indicators to issue amixed varieties to buy and sell signals, none of which have some validity.

Understanding how to make candles and Renko close the door to our FAQ then: the size of the box works best when the trade Renko charts?

As already mentioned, the only honest answer: "It depends", and this depends on what kind of forex trader with Renko charts.

Some traders are more suitable for long term traders. They tend to focus on an hourly basis, or 4-hour chart and watch for new trends develop,jumping in once said trend is spotted and hanging in as long as they can to bank a maximum number of pips.

These types of traders should use larger box settings, such as 25 or 30 pips. If price moves up 25 pips and forms a new box, it must move DOWN by 50 pips in order to open a new box in the opposite direction. If you are familiar with trading pairs like the EUR/USD or the GBP/USD, you realize that large price reversals such as these don't take place all that often. Once a trend is established in one direction, that trend will normally continue for 100-200 pips. Using a large box setting like 25 or 30 will eliminate those counter signals you might get using a 1 hour or 4 hour chart (those signals that cause you to exit a trade early, before another big move in your direction).

Other traders are more attracted to scalping and the kind of quick profits you can make on a 5-20 pip move. By using a 3 or 4 pip box size setting, these traders are in prime position to see every mini-trend as it forms and are able to buy and sell numerous times in any given hour during the London and NY trading sessions, banking 5-20 pips in profit each time.

When I respond to the question "which box size should I use?" my response will always ask the trader to perform a little self-analysis and determine whether they are a long-term trader or a scalper. Once I know the answer to that question, I can give them a more specific answer than "it depends."

Renko Charts - Which Box Size Is Best for Trading Forex?

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