Renko Chart Tutorial

How trade with renko chart

Box Renko

How is a 10 pip renko bar formed?

1. A new green (UP) renko bar forms only after the current price surpasses the top of the previous

renko bar by 10 pips.

2. Green renko bars open on the bottom of the bar and close on the top of the bar. Green renko bars display the closing price which is also the HIGH price for this green renko bar.

3. A new red (DOWN) renko bar forms only after the current price surpasses the bottom of the

previous renko bar by 10 pips.

4. Red renko bars open on the top of the bar and close on the bottom of the bar. Red renko bars display closing price which is also the LOW price for this red renko bars.

Advantages

Renko Bar Charts offer the following advantages:

1. Visual Appeal

2. Zero Indicators

3. Objective Decision-Making Process

4. Filters Out Market Noise, i.e. “whipsaws”

5. Displays Areas Of Support And Resistance

6. Based On Price Action (movement of prices)

Renko bars remove the “distractions” seen on typical bar or candlestick charts. These distractions include “whipsaws” such as long wicks, false breakouts and price volatility.

Renko bars clearly define current trend and key price levels such as support & resistance and trend reversals.

Buy Setup

A #1 Buy Setup represents a pullback in a current trend. Look for the following:

1. A trend (x-y) or sequence of green renko bars followed by a pullback (y-z) of red renko bars.

2. Wait patiently for the 1st green renko bar (Trigger Bar) to close immediately following the pullback. Enter trade here.

Renko Chart

3. Make sure the last red renko bar (z) on the chart is higher than the last red renko bar in the previous pullback (x).

4. This setup is a higher swing low. Place your stop loss underneath this higher swing low (z) or the previous swing low (x).

Sell Setup

A #1 Sell Setup represents a pullback in a current trend. Look for the following:

1. A trend (x-y) or sequence of red renko bars followed by a pullback (y-z) of green renko bars.

2. Wait patiently for the 1st red renko bar (Trigger Bar) to close immediately following the

pullback. Enter trade here.

3. Make sure the last green renko bar (z) on the chart is lower than the last green renko bar in

the previous pullback (x).

4. This setup is a lower swing high. Place your stop loss above this lower swing high (z) or

above the previous swing high (x)

Scalping setup with renko chart

1. Determine How Much Risk: Money Management

2. Identify a FX trade setup (Buy or Sell Setup)

3. Enter trade

4. Manage trade/exits

Renko Bar Chart Parameters:

1. 2 or 5 PIP renko bars

2. Use a 10 TICK chart (Look for CLOCK icon)

3. EUR/USD, GBP/USD, USD/CAD, AUD/USD, USD/CHF,

USD/JPY, NZD/USD, CAD/JPY, EUR/JPY and GBP/JPY

Trade Exits:

1. 3 Renko Bars Reversal:

3 renko bars of opposite color appear and close on charts. Use a 6 to 15 pip trailing stop if you want to “automate” this type of Trade Exit.

2 Fixed Amount:

100% exit at 1st profit target. Use a fixed take profit to “automate” this type of trade exit.

Swing with renko chart (setup)

1. Determine How Much Risk: Money Management

2. Identify a FX trade setup

3. Enter trade

4. Manage trade/exits

Renko Bar Chart Parameters:

1. 10 PIP renko bars

2. 1 minute time frame

3. EUR/USD, GBP/USD, USD/CAD, AUD/USD, USD/CHF,

USD/JPY, NZD/USD, CAD/JPY, EUR/JPY and GBP/JPY

Trade Exits:

1. 3 Renko Bars Reversal:

3 renko bars of opposite color appear and close on charts. Use a 30 to 50 pip trailing stop if you want to “automate” this type of Trade Exit.

2 Fixed Amount:

100% exit at 1st profit target. Use a fixed take profit to “automate” this type of trade exit.

Position Trader

1. Determine How Much Risk: Money Management

2. Identify a FX trade setup

3. Enter trade

4. Manage trade/exits

Renko Bar Chart Parameters:

1. 25 PIP renko bars

2. 1 minute time frame

3. EUR/USD, GBP/USD, USD/CAD, AUD/USD, USD/CHF,

USD/JPY, NZD/USD, CAD/JPY, EUR/JPY and GBP/JPY

Trade Exits:

1. 3 Renko Bars Reversal:

3 renko bars of opposite color appear and close on charts. Use a 75 to 125 pip trailing stop if you want to “automate” this type of Trade Exit.

2 Fixed Amount:

100% exit at 1st profit target. Use a fixed take profit to “automate” this type of trade exit.

Trade exits

Trade Exits are a very important function of a trader’s profit/loss performance. Ideally each individual forex trader needs to find an exit strategy which fits his/her trading personality and trading objectives.

Whether you are a Scalper, Swing or Position trader, you need to experiment with your trade

exits in an effort to maximize your profits.

Scalping: I suggest starting with 3 to 5 Renko Bars or a 10 to 15 pip stop loss and using a

1:1 take profit or use a 10 pip trailing stop loss set on initial 15 pip stop loss.

Swing: I suggest starting with a 3 Renko Bar or 30 pip stop loss and using a 1:1 or 2:1 take

profit or use a 10 pip trailing stop loss set on initial 30 pip stop loss.

Position: I suggest starting with a 3 Renko Bar or

75 pip stop loss and using a 1:1 or 2:1 take profit or use a 10 pip trailing stop loss set on initial 75 pip stop loss.

Money Management

Keep your % risk the same for each trade.

1. Conservative: 0.5 % - 1.0 %

2. Moderate: 1.0 % – 3.0 %

3. Aggressive: 3.0 % - 5.0 %

Start conservative until you develop the discipline to recognize the 4 FX

trade setups and execute them without making any mistakes.

Adjust your % Risk each Week. This approach will protect your trading capital when you are losing trades, and allow you to grow your capital faster when you are winning trades.

Always keep your % Risk where you decide it needs to be. Adjust your position

size if you need to use a larger stop loss. Do not use a larger % Risk with larger stop loss.

Renko Chart tutorial Quiz

How to trade with renko chart Quiz