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I have a question to the people who are familiar with Renko charts: I'm looking for the optimal brick size (not an arbitrary number, but rather a formula to calculate it).
In fact what you are doing is making the trade-off between the number of swings the chart makes and the size of the bricks. Evidently I could use a solver in excel but there must be another way to quantify this.
Any suggestions or people who have the same problem?
Program an EA with Renko indicator with the block size as an extern variable. Now you can optimize your profit (it can be a small loss as well) by changing the block size. This is the best way I know of. You also have an EA which you can use to trade if somethingis profitable.
I prefer to trade using pure price movement and I use RENKO analysis to determine my entry and stop levels. It is very simple concept based on price threshold levels. Essentially, I trade the EURUSD with a trailing stop value of 150 pips in steps of 75 pips. Price would have to retrace max 150 pips to reverse the signal on my 75 pip RENKO box. The advantage of RENKO analysis is that the variable of time on the charting axis is removed from the system. The renko boxes will not repaint or flicker after the standard candle timeframe has closed but the price must exceed the box value for a new box to appear.
I have attached the previously posted RenkoFX indicator and a screen shot of the Renko EURUSD since Feb 08. In just the the last major move alone, we see a 75 pip RENKO box has captured over 1000 pips with no ‘noise’.
Choppy markets can lose money using the RENKO box method depending on the box size chosen. However, a market that is in a price stagnation or standstill for an extended period will not give false signals under RENKO analysis. This is the major distinction of the RENKO indicator compared to any moving average indicator that illustrates price momentum.
A quick visual inspection of the applied RenkoFX indicator will reveal the estimated profitability of your chosen box size in your market. The net profit of each directional color sequence can be calculated by counting the number of consecutive boxes in a continuous series -minus three boxes. A three box color retracement will be a break-even scenario. A two box retracement will be a loss of one box value in pips. A one-box retracement will be a loss of two box values in pips.
Since Feb 2008 when the EURUSD was 1.4493, the attached RenkoFX indicator screen shot has a rough approximate winning value of 25 boxes x 75 pips per box = 1875 pips
Important Note: The indicator must be placed on 1minute charts in the Metatrader platform. Larger time frames will offer longer dynamic signals since the Renko box will not truly ‘close’ in a speedy manner.
Feedback appreciated. Thanks
Last edited by newdigital; 07-04-2009 at 01:38 PM.
I prefer to trade using pure price movement and I use RENKO analysis to determine my entry and stop levels. It is very simple concept based on price threshold levels. Essentially, I trade the EURUSD with a trailing stop value of 150 pips in steps of 75 pips. Price would have to retrace max 150 pips to reverse the signal on my 75 pip RENKO box. The advantage of RENKO analysis is that the variable of time on the charting axis is removed from the system. The renko boxes will not repaint or flicker after the standard candle timeframe has closed but the price must exceed the box value for a new box to appear.
I have attached the previously posted RenkoFX indicator and a screen shot of the Renko EURUSD since Feb 08. In just the the last major move alone, we see a 75 pip RENKO box has captured over 1000 pips with no ‘noise’.
Choppy markets can lose money using the RENKO box method depending on the box size chosen. However, a market that is in a price stagnation or standstill for an extended period will not give false signals under RENKO analysis. This is the major distinction of the RENKO indicator compared to any moving average indicator that illustrates price momentum.
A quick visual inspection of the applied RenkoFX indicator will reveal the estimated profitability of your chosen box size in your market. The net profit of each directional color sequence can be calculated by counting the number of consecutive boxes in a continuous series -minus three boxes. A three box color retracement will be a break-even scenario. A two box retracement will be a loss of one box value in pips. A one-box retracement will be a loss of two box values in pips.
Since Feb 2008 when the EURUSD was 1.4493, the attached RenkoFX indicator screen shot has a rough approximate winning value of 25 boxes x 75 pips per box = 1875 pips
Important Note: The indicator must be placed on 1minute charts in the Metatrader platform. Larger time frames will offer longer dynamic signals since the Renko box will not truly ‘close’ in a speedy manner.
Feedback appreciated. Thanks
How do you know when to buy or sell?
Do you wait for a color change?
Thank you for your help.
Sounds like Range Bars.
There is a thread on TSD about them.
Mart
Quote:
Originally Posted by MrM
Hi,
has anyone ever tried to make renko charts (candles that are based on number of pips in one direction: candles close after e.g. 20 pips up or down, and don't close after a certain period of time e.g. 15min)? I have found a custom indicator that displays a renko indicator at the bottom of the chart, but I need the actual candles in my chart to be "renko candles".
Does anyone have ideas on how to calulate,
Maybe using atr or adr for 1h or day or something
Quote:
Originally Posted by MrM
Hi
I have a question to the people who are familiar with Renko charts: I'm looking for the optimal brick size (not an arbitrary number, but rather a formula to calculate it).
In fact what you are doing is making the trade-off between the number of swings the chart makes and the size of the bricks. Evidently I could use a solver in excel but there must be another way to quantify this.
Any suggestions or people who have the same problem?
I prefer to trade using pure price movement and I use RENKO analysis to determine my entry and stop levels. It is very simple concept based on price threshold levels. Essentially, I trade the EURUSD with a trailing stop value of 150 pips in steps of 75 pips. Price would have to retrace max 150 pips to reverse the signal on my 75 pip RENKO box. The advantage of RENKO analysis is that the variable of time on the charting axis is removed from the system. The renko boxes will not repaint or flicker after the standard candle timeframe has closed but the price must exceed the box value for a new box to appear.
I have attached the previously posted RenkoFX indicator and a screen shot of the Renko EURUSD since Feb 08. In just the the last major move alone, we see a 75 pip RENKO box has captured over 1000 pips with no ‘noise’.
Choppy markets can lose money using the RENKO box method depending on the box size chosen. However, a market that is in a price stagnation or standstill for an extended period will not give false signals under RENKO analysis. This is the major distinction of the RENKO indicator compared to any moving average indicator that illustrates price momentum.
A quick visual inspection of the applied RenkoFX indicator will reveal the estimated profitability of your chosen box size in your market. The net profit of each directional color sequence can be calculated by counting the number of consecutive boxes in a continuous series -minus three boxes. A three box color retracement will be a break-even scenario. A two box retracement will be a loss of one box value in pips. A one-box retracement will be a loss of two box values in pips.
Since Feb 2008 when the EURUSD was 1.4493, the attached RenkoFX indicator screen shot has a rough approximate winning value of 25 boxes x 75 pips per box = 1875 pips
Important Note: The indicator must be placed on 1minute charts in the Metatrader platform. Larger time frames will offer longer dynamic signals since the Renko box will not truly ‘close’ in a speedy manner.
Feedback appreciated. Thanks
Very interesting ... Thanks fxadvisory.
FerruFx
__________________ FerruFx / www.ervent.net - Professional Coding Services (EAs/Indicators/Alerts)
The renko chart, shown in Exhibit 7.'1,,i s also termed a neri, training,or zigzag chart. The renko charts looks similar to the three-bar break chart since they both have lines that look like blocks. The individual blocks that form the renko chart are sometimes referred to as bricks (the term renko may come from "renga," which is the Japanese word for bricks).
As we saw in Chapter 6, in a three-bar break chart, another line is added as the market moves in the direction of the prevailing trend, no matter how small the move. For example, if the market closed today by even one tick higher, a new white line would be added to the three-line break chart if the prior line was white.
However, for a renko chart, a line is drawn in the direction of the prior move only if a fixed amount has been exceeded. For example, if there is a white brick on the renko chart, the market has to advance by a predetermined fixed amount before a new white brick can be drawn.
Another difference between the renko and three-line break chart is that the lines in the three-line break chart are of different sizes, while the bricks in a renko chart are all the same size.
Quote:
The renko chart uses closing prices. The first step is to choose a price range unit. This price range point is the minimum amount the market must move before a renko brick is drawn. The price range point also serves to set the height of the brick. Thus, a five-point renko chart would have bricks that are five points tall. This will become clear after I go through the following detailed example. An important aspect of the renko chart is that rising lines are denoted by equal size white bricks and falling lines are denoted by equal size black bricks. Thus, no matter how large
the move, it is shown on the renko chart as equal sized bricks. For example in a five-point renko chart, a 20-point rally is displayed as four five-point-high renko bricks.
You would buy/sell when the first color change would occur. At least that is how I do it. The previous position is closed when the new position is opened.
Linear Mode
