How to Write Renko Chart for MT4: A Beginner’s Guide

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What are Renko Charts?

Renko charts are a technical analysis tool used to predict price movements in volatile financial markets. They are graphical plots of price movements in an individual security or market index that are based on a certain price range – a predetermined number of units. If the price of the security or index rises by the predetermined number of units, a new Renko bar is created. The Renko bars are plotted on the chart in order of increasing price range. This type of chart helps traders to identify support and resistance levels more easily and to facilitate a trend trading strategy.

Renko charts are composed mainly of price movements, so indicators and other trading techniques such as trendlines, price channel analysis, pivot points, Fibonacci lines, etc. can still be used to supplement the visual analysis. Traders may also use volume, momentum and other indicators to gauge the strength of the bullish or bearish trends that the Renko chart may show.

Why Should You Use Renko Charts

Renko charts are useful for traders who need to follow markets that are highly volatile and difficult to read. These charts enable traders to have a much clearer view of price movements and reduce the amount of “noise” that other chart formats can create. The Renko bars are based on price movements rather than time, which means that a Renko chart is not affected by gaps and other irregularities often found in the price series. This makes it easier for traders to interpret the trends and identify support and resistance levels.

Another advantage of using Renko charts is that they make it possible to identify breakouts more easily. Price breakouts occur when the price moves beyond a certain level and is considered to be a sign of strengthening of the underlying trend. By monitoring the Renko bars, traders are able to identify breakouts quickly and accurately.

How to Trade with Renko Charts

When it comes to Forex trading, Renko charts can be a valuable tool for traders who are looking for a more reliable and predictable way to enter and exit trades. To use Renko charts for Forex trading, traders should first select a base currency for the charts. For example, they could use the EUR/USD or GBP/USD pair. Once the base currency has been selected, traders can then set the brick size – the amount of pips that will make up one Renko bar.

The key to using Renko charts effectively is to watch for price breakouts. When the Renko bars exceed a certain level, it may signal a possible trade opportunity. Traders should then use additional indicators and techniques to confirm the trend before placing a trade. If the trend is confirmed, traders may then employ a suitable entry strategy, such as a buy or sell order, to take advantage of the trend.

It is important to remember that Renko charts should be used in conjunction with other trading techniques and analytics tools. By combining the information from Renko charts with other indicators and analytics tools, traders can get a more comprehensive view of the market and make more informed trading decisions.

What is a Renko Chart?

A Renko chart is a type of financial chart that is used to track the movements of assets such as stocks, commodities, and currencies. However, unlike other charting tools, Renko charts are based on price movements, and they provide insight into trends without too much noise. This makes Renko charts a simple, yet powerful, tool for traders and investors alike.

Renko charts trade off-time axis, instead focussing on the movement of the asset. As such, the chart is made up of a series of blocks designed to show market movements, such as an increase or decrease in the price. As the market moves, the blocks will size in accordance to the size of the move. This enables the viewer to measure the speed and intensity of the market.

Renko charts rarely move up or down, but rather jump on the close of each block. Thus, this makes them more reliable for predicting future market movement trends than other charting tools.

Using MT4 Renko Charts for Trading

The MT4 platform has a built-in Renko chart feature which makes it easy to set up and analyze. The process of setting up a Renko chart is simple and straightforward. First, the trader picks the time frame for the chart, this is usually the 4-hour timeframe. Then, the chart is switched to a Renko chart, and the parameters for the Renko chart are set. These parameters specify the box size and the box movement’s interval. The box size is the minimum price range which needs to be crossed before a new box is added. This means that there will be more volatility on small time frames and less on large time frames.

Once the chart is set up, the trader can start looking for the opportunities. The trading strategy which is employed when using Renko chart is very similar to the strategy which is used when trading with regular chart. The same signals can be used to trigger trades; however, it is important to remember that on small time frames, Renko charts might not move in sync with the standard charts.

Renko Trading Strategy

When using Renko chart, the trader has to make sure that the market has started to move in the desired direction before initiating the trade. This means that the trader needs to wait until at least two blocks have formed in its favor. This greatly reduces the risks of trading with Renko charts.

Another popular strategy is to use Renko charts as confirmation tool. If the trader is uncertain about the directions of the price, Renko charts can be used to confirm the direction. This strategy is especially useful when trading on higher time frames.

Renko charts can also be used to determine the best entry and exit points of the trade. The boxes provide clear and easy to recognize visual signals and the trader can easily define the area in which trades should be taken.

Finally, when using Renko charts, risk management and money management is essential. As the Renko chart provides less data than the standard chart, a stop loss and take profit should be placed below the lower box or above the upper box. This way the trader will be able to maximize profits with minimal risks.

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