Renko Trade Setup Filters And Trading Inside Consolidation

Renko trade setup filters are conditions that keep a method trade setup that occurs, from being traded.  The basis for these trade filters is to increase trading profitability.  This is done by avoiding the things that tend to keep price from continuing after a trade entry and causing loses.

Although there will be times that trade setup filtering will cause a profitable trade to be missed, there are more times that a losing trade will be avoided.  The method has 3 Renko trade setup filters:

  1. Price filter
  2. Momentum filter
  3. Consolidation filter

These trade filters are described further in the section below.

Renko Trade Setup Filters

For instance, you know from the Renko chart trade setups discussion and video that we have a method setup called a price envelope reverse.  However, before this setup is traded, it is checked against the following Renko trade setup filters:

Price Envelope Reverse

  • Does the trade entry have at least 3 bricks of room to a price viewed as support or resistance
  • Is the trade entry with momentum
  • Is the trade entry on a directional Renko brick [green if buy-red if sell]

Here are the trade filters for our other Renko trade setups:

Midline Reject

  • Does the trade entry have at least 3 bricks of room to a price viewed as support or resistance
  • Does the trade have momentum [MEx] flow
  • Does the trade have a momentum [Extreme] continuation hook

Price Extreme Reverse

  • Does the trade entry come after 5 or more consecutive Renko bricks, after the last price extreme reverse or Renko trade setup
  • Does the trade entry have at least 3 bricks of room to a price viewed as support or resistance
  • Is the trade entry after a momentum [MEx] extreme

As you can see by the trade filters descriptions, we want to be sure that all of our trades have ‘room to price’ and that they are trade with momentum.

Price Consolidation Trade Filters

To this point, we have discussed the Renko trade setup filters for price and momentum.  However, we also have a filter for price consolidation – very simply, do NOT trade inside of consolidation.

When you look at the chart below, you see the consolidation period marked by the horizontal lines.  And inside of the price consolidation, you see 5 blue circles that are Renko trade setups – but as will be discussed further in the Renko method video below, all 5 of these trades are filtered.

Renko Trade Setup Filters When Inside Price Consolidation

Click link to watch video:  Renko Method Trade Filters

 

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