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
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
Attached Image (click to enlarge)
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