Renko Trading Method Charts
The Renko chart trading method uses charts that have bricks of a fixed size. A Renko chart brick does not use a time frame or trade volume. You are looking at a 3 Renko chart, meaning that each closed brick shows three ticks of price.
Regardless of now trading with Renko charts, these trading method basics are those used since 1995. At that time, I was option and position trading using time-frame charts. In 1997-1998, when I started with futures day trading, I switched to trading with tick volume charts.
It was 2011 when I started working with Renko charts. I liked the visual symmetry of these charts and the use of price as the primary focus and started developing the Renko chart trading method. I saw additional clarity with the method trading indicators and trade setups with my premise for price movement – and switched to Renko charts for futures day trading.
Renko Trading Charts
You are looking at 2 Renko charts with our trading method indicators. The left side is a classic three brick Renko chart, where the right side is a custom Renko chart that shows price tails.
Our Renko trading method uses NinjaTrader classic charts. Using these charts is a function of the Renko brick size and the amount of price information potentially not seen. However, a missed trading price could become more significant with bigger brick sizes and position trading. This has not been a day trading issue with 3-5 brick classic charts.
Renko Trading Basics
Momentum Leads Price
Here is a list of the basic premises that the Renko chart trading method uses:
- Momentum leads to the price continuation, which continues until the price reaches a resistance or support point.
- Additionally, since the price leads momentum, an extreme or divergence stops the price continuation.
- Momentum extremes and divergences lead to price reversing its direction or moving inside of a relatively tight trading range that becomes untradeable.
Renko Trade Setups
Consistent with these basics, the Renko chart trading method uses trading indicators and trade setups for entering a trade when momentum reverses to positive or negative. Our most basic trade setup, which is a price envelope reverse, a buy will occur when the Renko price envelope shifts from red dots on the top to green dots on the bottom. This envelope dot shift is also the point where momentum goes from negative to positive.
As momentum continues and leads the price swing, we look for Renko add-on trade setups. These will give a larger trade size for the larger trading swings. A trading swing and the price continuation can reverse or consolidate at momentum extremes. The Renko method uses this chart-read for trade management or trading direction reversal.
Renko Trade Filters
The use of trade setup filters regardless of the trading method is an essential component for increased profitability. Our Renko chart trading method filters’ objectives are to avoid trading setups with lower odds.
For instance, consider the following trade filters and trades that a trader would avoid:
- Entering a trade at support or resistance
- Buying a red brick or selling a green brick
- Trading against momentum extremes or divergences
- Trading inside of consolidation
There are times when a Renko trading setup occurs with lower odds than intended. By using the trading setup filters, there are more losing trades avoided than winning trades missed.
Renko Trading Method Overview Videos
You can watch the following video for a further overview of Renko chart trading, discussing the following:
- Renko trading method ‘base’ premise – momentum leads price.
- Renko charts and how the bricks are made, including differences between a Renko classic chart and a Renko chart with price tails
- Renko method trades showing the trade setups and trading indicators
- Renko method trades setups that are filtered
Renko Chart Trading Video Discussion
Continuing with an overview of the Renko trading method basics, we will now discuss the following chart and outline:
- Renko trading indicators and their momentum component.
- Renko trade setups and their multiple components vs. indicator only trading.
- Renko trade management including initial profit and loss, trailing profits, and price-momentum considerations.
- Renko trade filters, further discussing method trade setups with lower odds.
Note: if this were an actual Renko trading group video, it would not be pre-marked like the chart above. Instead, the video would go through it one Renko brick at a time to better simulate real-time trading.
Renko Trading Group Videos
The following links are for Renko trading group videos. Watching these will give you a better understanding of the content and objectives for these trading videos:
- Renko chart trade discussion, covering all aspects from the ‘base’ method setups and trade entry through trade management and trade exit or reverse.
- Further discussion, especially for any trade filters or chart difficulties that may have occurred. Although these are part of the Renko trading method, they would be important considerations for any trading method.
Renko Chart Trading Group
Enjoy these videos, along with the rest of the articles and videos in the Renko Chart Trading Strategies Website; I will be continually adding new content.
Renko Chart Trading
My objectives for the Renko Chart Trading Group are to provide a futures day trading method using Renko charts. Training will be done using Renko trading videos; there are typically 2 new videos each week.
The Renko method videos will include the following:
- All aspects of the Renko trading method from trade setups through trade management.
- Progressing from paper trading to real money trading.
- Method trading and system trading differences – we are not trading a mechanical trading system.
- Using trade filters for avoiding certain Renko trade setups with reduced odds.
The Renko trading group is $55/month. As a member, you will have access to all of the member training content. Additionally, you will receive my Renko trading indicators – these have been coded for NinjaTrader.
If you have any questions or would like more information, email me at RCT@earthlink.net