Renko strategy for price action

Hi Guys, I am not creator of this strategy, only helped Farkasb to open this thread because he is junior member.

I've been working on a strategy for a while which doesn't use indicators just basic technical analyses (tops,bottoms,break outs etc..). The logic is pretty complex so I'm not going to write it all down right now, but I'm interested in your opinion. Please check it out, if you find it promising I can open up a separated thread to discuss.

Basics:

Trigger: Opposite direction bar close / or break up/break down bar
Target: Previous top/bottom / or some trailing when break out

Top/Bottom definition: At least 4 bars in one direction than at lest 3 bars in the opposite direction

Picture explanation:

Tops/Bottoms: marked with purple boxes
Trade Opening: Red arrow (up/down - LONG/SHORT)
Opening/Closing price: Yellow dots
Stops: Grey dots

I always open trades at bar close. I use 3 bars for stop normally, 2 bars stop for break up/break down entries. I use trailing stop with a special logic (will explain later). I use tops/bottoms to analyze the trend, so I don't always open positions for both directions.

I trade 2 strategies basically.

1. "Turn bar" - it happens when an opposite direction bar closes. Preferable at a previous top/bottom. I use the previous top/bottom for target and 3 bars stop.
2. "Break out" - when a break out occurs from a significant top/bottom (at least 2 tops/bottoms - marked purple boxes). I use trailing.

In the given screenshot I marked the trades manually for illustration. There were 12 trades, 11 profitable 1 loss. I noted the profit/loss in pips. I used 10 pips renko bars.

http://www.forexfactory.com/attachme...1&d=1296664315

renko is an indicator man
try to put candlesticks with renko together on chart,because u might buy big spikes
just a warning

cheers

Could you please post a better picture? The one you have posted is low resolution and is unreadable. I'd like to see your strategy.

Questions: how long have you been trading this way and how are the results for you?

Dear Altoronto,

I'm working similiar Strategy with some Coder, need to solve for Entry/Exit Condition

Regards

about this indicator :
Tops/Bottoms: marked with purple boxes
==============================
HI I am interested , can you please share your indicator with purple boxes
because i'm on renko bars too , and want try your system
thanks
kino

Hello

I'm interested too about your method. I analyse your screen and it's impressive.

Could you please posts others screens on this system please.

Thanks a lot.

where are you guys, continue this great thread please..

i'am not exactely the same signals on my graph.

I would like to know, if it's possible to post a screen on your trades for the period between 10/01 and 12/01/2011 and for the period between 18/01 and 21/01, please.
Because i'm not profitable i lost pips on this it when i try to applie your method...

Thanks.

Hi Guys,

First of all, thanks for opening this thread on my behalf. I'm sorry to be inactive recently, but I was a bit busy with other things.

About myself:
I've been trading for about 5-6 years. I develop automated intraday trading systems. I have working strategies for some futures contracts (ie. DAX, HSI) which are based on range bars and some indicators. I would like to develop a strategy in addition which would rather be based on price action than indicators. The problem with time based or even range charts is the definition of tops/bottoms programmatically. I believe using renko will help to solve this problem.

About the strategy:
It is not final yet, I'm still working on it. I already have some rules, which seems to be working, but I still have some situations to cover. For this reason I need you to help me with testing and sharing your ideas and opinion. I believe in order to trade successfully you always need to be aware of what you are going to do, therefore you need a well defined set of rules what you can follow (ie. you need to know when to open exactly, when to move your stop, when to exit etc.. there shouldn't be any moment during trading when you are uncertain of what to do). I consider a strategy complete if all possible situation is covered (well, something unexpected can always happen, but we must try to be prepared as much as possible).

Tops/Bottoms:
One of the most important part is to define tops/bottoms. Here are the rules so far:
- The price must go at least 4 bars in one direction than at least 3 bars in the opposite direction to form a top/bottom
- A bottom must be followed by a top and vica versa. It can happen that the price is going down for example and a bottom is formed (4 bars down, 3 bars up) than the price continue to go down and form a lower bottom. In this case the first bottom (the higher one) will be ignored because there was no top in between (see first bottom on the screenshot one. I marked it differently). (We can call this obsoleted top/bottom for example.)

Trend indications:
Tops/bottoms in pairs are used to indicate general direction of price movement.
- Bullish: If the last two tops are positioned higher in relation to each other and similarly, the last two bottoms as well
- Bearish: If the last two tops are positioned lower in relation to each other and similarly, the last two bottoms as well
- Neutral: Any other combination

Triggers (entry):
Two signals are traded currently:
- Reverse Bar (or turn bar): it happens when an opposite direction bar closes
(Target: previous top/bottom, Stop loss: 3 bars, if the trend is Bullish short signals must be ignored, if the trend is Bearish long signals must be ignored)
- Break Out: when a break out occurs from a significant top/bottom
(Target: trailing, Stop loss: 2 bars, Trend must be either Bullish or Bearish to trade; if neutral this signal must be ignored). Optionally (it depends on the current instrument) it requires 2 tops/bottoms to be on the same level (consider it significant price level)

I'll explain trailing rules next time I post. (you can see trailing "dark green" dots on the picture).

Regards,
Balazs

Hi,

There is one rule I use in addition what may help:
- If the price reaches -1 bar to my target (well, you can never know, it might have reached it to 1 pip.. you won't see it because of how renko works) I move my stop 3 bars to the target. It means it will exit for the first opposite bar close. The reason is some kind of a money management. I don't want to risk 3 bars for 1 bar. This happened at the first trade I marked on the screenshot.

Let's get through the trades:
1. Short - (Trend is Bearish) - price turns back -1 bar to the target (mentioned above)
2. Short - (Trend is Bearish) - target is reached
3. Long - Double Bottom - (Trend is Bearish) - you may or may not trade Double Bottom/Double Top against the trend. We can ignore it if we stick to the original rules.
4. Short - (Trend Neutral - last two bottoms are on the same level) - price comes back, stop is reached.
5. Price breaks out, but we can't trade it because the trend was Bearish before. We need to wait for a pullback. It happened, open at reverse bar. Target reached.
6. Long - (Trend Bullish) - price comes back, stop was reached
7. Long - (Trend Bullish) - target reached
8. Short - Double Top - Again, you may not trade this.

Overall:
If we wouldn't trade double top/double bottom signals: -10+30-30+30-30+30 = +20 pips

It's not so much indeed, but most strategies work the best when the market is trending. This period was rather sideways/channeling. I'm not saying that this would work for all kind of market conditions, but I believe it would make more when it works than it would lose when it doesn't.

I'm open to suggestion of which rules would work better during this kind of market conditions (or how we can know that it shouldn't trade), so if you have any idea feel free to share

Regards,
Balazs

[quote=farkasb;4384449]Hi,

There is one rule I use in addition what may help:
-------------------------

it would be kind if you can share this indicator
that plots violet dots on graph
so that we can try your system for a while
thanks
kino

hello,

thanks for your response farkasb.

When i would test your method i determinate rules more aggressive than you. I join a screen.



I don't would like to change your strategy but my top and bottom is formed when 2 bars, consecutives or not is in the same direction.

I have a lot of trade. But sometimes i have bad days (screen).

in choppy market... If applie a mix on your strategy and my mine (based on your method). i lost 26 pips 08/02 and win 92 pips 09/02.

My rules is not fix for the moment because i discover the renko's price action.

[quote=kinonen;4385686] Hi Kino,

I mark them manually based on the rules I described, because I don't have any indicator which would do it exactly this way.

You may try this one:
http://codebase.mql4.com/286

It's similar, but not the same.

Regards,
Balazs

[quote=farkasb;4387384] +++++++++++++

thanks i was thinking it was a kind of fractals
let's try

kino

Take a look at my post here

OK so you have made an EA, what is your purpose for posting that here? Are you selling the EA? Giving it away? What?

What happened here?

Don't lie for yourself. "Time is the most important factor in the financial Markets" - Willian Delbert Gann.