Animal Farm (Renko system)

You can't determine LL unless previous fractal is broken, it can be done only by lower close

Look at my last chart, before first green line, fractal is broken and it confirms LL

You can look for a buy after HH (on your chart) is broken, untill that I would be looking only for a short!

Here is one of my trades from this week

I am having errors on setting up a higher Renko box size. MT4 just hangs. I have another Renko setup with box size 10 but its not the median Renko is the standard one. Ideas?

I was able to get the median renkos working on 10 pip boxes on M2 time frame.

Size 8 time 6 seems to be working on all but NZD/USD it crashes mt4

Kmalex. I suspect that you and spyderman have different data feeds. This is often a source of confusion in Forex when peo0ple compare charts. Each broker tends to have their own data feed and minor differences occur.

I consider a break of a fractal as a break but when the fractals are very close in price levels is it time for caution. Soon the count will clarify itself. As you get to use the MACD more it will show that confused areas are always in count trends/corrections.

Monocor, thanks for your trade charts. You have a good system going. If anything here makes it better please comment. Your input is great.

I am going to talk about trailing a stop X bars, back. (Actually two bars back, plus a bit of room.)
I am also going to introduce another indicator that works very well with Renko.

Let's have a look at how a stop or an entry can be attempted:



On the diagram, the method frequently used for an entry, is to enter is when the Renko Bars have changed color.
So if we have green bars going up and we get two red bars we close a trade or go short.

That is method 2. As illustrated in the diagram.

We know that the wick bar is a reversal signal, so entering at the bottom of the wick bar ( plus a pip ) gets into a trade a bar earlier.
That is the equivalent of two green bars plus a pip. I like earlier entries as the little bit you gain often covers the spread etc.

I can use LOC to trail a two bar stop, using its X bars back function. LOC will move the stop to the two bars back level as each
new bar forms. (Plus a pip or whatever you select as an additional buffer.) I set the initial stop to equal to the number of pips
that this would entail. So If I am using 4 block bars the initial stop would be set 4 + 4 + 1 pip = 9 pips back.

You will need to adjust the initial stop according to the block size that you use and trail it manually, if you do not have a trade manager,
such as LOC, that does it for you.

Using the two block trailing stop versus a fractal trailing stop will be something that we can discuss. Each has its merits.

The Fractal trailing system is very good at keeping you in longer term trades.



Here is an entry at a reversal on a wick bar. Using a fractal trailing approach, the stop is moved down from one LH to the next.
Then you run into an area (inside the ellipse) where the MACD shows a counter trend and it becomes tricky to get the
LL LH sequence correct. All of the up fractals are so close and then the last one, that is the actual LH shown, pokes just a little bit higher.

How do we avoid a premature exit there?

The solution is easy, just put a larger buffer on the fractal trailing stop. LOC will keep the stop any distance that you specify above the fractal.
A 10 pips buffer keeps you in the trade, safely above the tight, counter-trend fractals, until the trend resumes. (MACD confirms when that happens.)

The trailing fractal stop with a 10 pip buffer keeps you in for about 687 on that move. A larger buffer on the fractal trailing stop makes life easier.

The X bars back trailing stop does not weather the choppy counter trend fractals but it will manage a trend trade nicely.
Which one you use, depends on what you want to do.

Note that both trailing stop methods will sacrifice some of the move, that is the nature of a trailing stop.

Next I will introduce the last indicator that I use with Renko Charts.

After that, some strategy and I think we will be pretty much ready to test, torture and improve the method. Maybe even
develop an order ea that will take advantage of certain situations that occur in very fast markets.

I will let it sit at that now and field any questions.

Just a note. I like to cite sources for indicators when I know where they originated.
The MACD Candles Indicator can be found at http://cjatradingtools.com

Thanks to CJA for sharing .

Here was a bearish trade with an X bar stop.



The trade was trailed and closed by LOC, while I had a Sunday Afternoon nap. The sound of the Wick Arrow
alerts woke me up in time to catch the bullish entry, though I was a tad late.

The bullish trade is now in progress.

Note that I also have pending orders in place at the fractals to catch any break out trades as well. The LL LH count
prevails at this time unless that upper buy stop above the LH fractal is broken. (LL LH is not labeled on the chart.)

The candles change color depending on the MACD. At this point we have bright green candles because
the MACD is above zero.

The black line on the chart is the close price line. It interacts nicely and we will use it in future charts, especially
when I introduce the next indicator - which it interacts very nicely with.

Just got stopped out by LOC, so I went short again.



I will let LOC trail the stop and see how it goes. If it breaks the lower fractal, as mentioned I have a pending order there.

today was a good trade with EJ, 2 orders, in total +80 pips.

HEY ,WAB
Is the divegence the reason of the bullish trade as the LL/LH count wasn't changed there .

Yes the divergence was the reason. That and the opportunity to show how the X bar stop works.

I think I will have to look at the USDJPY as monocor keeps nailing it. So far I have just been using the EURUSD for examples.

Thanks for clearing that out and waiting for the upcoming indicator , also we want to sum all the things up as i am starting to get confused a little bit

thanks for sharing this system wap
i like renko bars very much just the best for scalping

Anyone want to talk about the EU right now?

I like the EU reversal at 3532 and the AU at 8791. Just waiting on signals.

A picture being worth a thousand words, here is a summary of the various signals and strategies so far.



First of all is the LL LH count. A LH is not confirmed until price breaks below the last LL.

There is no indicator that will count the HH HL LL LH sequence properly … you have to learn how to do this yourself.
Everything else is secondary to this.

When price breaks above a confirmed LH a trend reversal has occurred. (See point 1 on the chart.)
This is tells us to look for an opportunity to go long after a correction.

The opportunity occurs at point 2 on the chart.

A Wick Entry forms on the Median Renko Bar and a long trade is entered just above the wick bar. (WE)

An additional entry signal is give as price breaks above the red De Mark Trend Line (DMTL) at 3.
Then the DMTL re-sets itself and a further break above it signals another place to go long at 4.

A break above the previous HH at point 5, is another long entry place. (This one was taken for a trade.)

Each additional WE can be taken if the MACD/candle colors/ HH HL LL LH analysis, shows a suitable trend.

Trends are identifiable, at a glance, by looking at the color of the candles.
If the MACD is above zero and price is rising, the candles will be bright green. If the MACD is below zero and
price is rising, the candles will be dull green. Bright Green candles mean a strong move is underway. Small
counter-trend moves, with MACD above zero, will give dull red candles and may present an opportunity to add
on new bullish WE trades.

Proper trend analysis using HH HL LL LH must match what the MACD is telling us.

The red and green arrows are alerts with a sound that is designed to draw your attention to the wick bars.
They are produced by the MA crossover signal set to EMA 1 and 2.

The circles mark fractals and the pivot points from which the DMTL is calculated.

Blue Fractal arrows are shown on the chart but they are redundant –see above. Just use the DMTL circles for fractals.

Divergence on the MACD and an understanding of the relationship between the MACD trends and counter trends and the
corresponding candle color is necessary.

The Close Price is displayed on the chart as a black line. “Chart on foreground,” is turned off in the chart properties to get
this displayed properly with the Renko Bars.

All of the above indicators are merely aids to help you see what is already there in the Renko Charts. If you can count the
HH HL LL LH sequence, locate wick bars and fractals, then draw trend lines, you can do everything the indicators are designed
to do. It takes practice and it is worth practicing because then you understand it better.

The Signal Line is displayed as a red or a green line on the Renko Bars.

I may or may not use all of the above indicators but I do like the Signal Line because it gives me the opportunity to gauge the
strength of a move.





Note how the black Close Line and the green Signal Line are far apart at the beginning of a move and they converge as the move matures.
Then, the Close line drops below the Signal Line and the counter trend or reversal move starts. This works well in conjunction with the MACD
and MACD color candles. The Signal Line Close Line relationship gives us a bit of an edge in anticipating changes in direction as they converge
and cross and the momentum of a move weakens.

(Drop a vertical line anytime the Close Line and Signal Line converge or cross and see how they all line up.)

The Signal Line also changes color and that draws our eye to a possible entry along with a Wick Alert Arrow.

When a bar pokes through the Signal Line we get another possible entry signal.

At this point, I have presented a method for any and all to use, modify, debate, trade and so on.
I have used 4 pip blocks on the EURUSD and I am open to trying other size blocks and other pairs.

I look forward to seeing how this taken forward.

Wab Hello!
First, congratulations for strategy and thank you for sharing knowledge with us. this is very precious and accompanied only today all your posts!

forgive me for my English, I am Brazilian and I'm not used to writing in English.

I would ask you to send the signal line indicator but can not find the Internet the same as you use!

Big hug and thanks again!

Sorry, I thought I had posted it already. Here is the Signal Line Indicator ducka.

Wab

Thanks for marking up that chart and the documentation..!!

daveM

Thank so much, Wad!
the configuration is the same that comes standard, right? I will soon post my contribution to the group!

Yes, the Signal Line settings are already set.