Animal Farm (Renko system)

Hi Eurix
thanks for your help!

Hello fellow Renko Fans.

I have been getting some fresh interest in this topic from various people and I will start posting again in a day or two.

The upgrade to version 600 plus derailed many things but that is in the past now and many of the issues have been solved.
Stay tuned and we can take the Renko studies forward.

I have been experimenting a lot with auto systems and perhaps we can find some good strategies there.

Thanks to those of you that have sent me private messages of encouragement.

Interesting to hear from you again. I am still subscribed to your thread. Looking forward.

Reboot of Animal Farm.

It is a good idea to read over the thread, prior to this post, as there is a lot of good information in it. Many questions have already been asked and answered and it saves everyone time if you come to the discussion already informed.
When MT4 began all of the upgrades to version 600 + a lot of Renko things that I was using stopped working. It took a lot of effort to get back on track and each upgrade offered new challenges. Many of the Renko off-line generators became non-functional or unreliable. I eventually started using a commercial Renko Chart generator (Free demo at forex ovo) and found a more stable Renko Chart generator to work with.
Currently I am not up on the latest, free, Renko off-line chart generators. If anyone has a good one that they can share, I am open to using it here, so that we have consistent charts to discuss. It must show the wicks. Wicks are important.
When it comes to charts:
In a rising market they form a series of higher highs and higher lows. This eventually reverses to form a series of lower lows and lower highs in a falling market. A trader has to be able to recognize this and know how to take advantage of it.
Price action alone tells us where the trend really is, right here and now.
To me, Indicators either lag or require interpretation, which differs from person to person. Even the best of indicators are often wrong and you dont know until after the fact.
If you have an indicator that you really like, give it this test. Cover up the price data and just trade the indicator all on its own. It is an interesting experiment.
Some indicators are useful as they help identify structure and momentum in a chart, but again subjective interpretation is required.
Even price, the ultimate indicator in my opinion, requires interpretation.
The Elliott Wave is the most complex of the price interpretation methods and I have spent countless hours on Elliott Wave. Any two people can strongly disagree on Elliott Wave counts and its use becomes a very personal focussed one. Sometimes I look at what the Elliott Wave experts agree on and sometimes I disagree with their analysis. Sometimes I am right and sometimes they are right. Sometimes we are all wrong.
The HH HL LL LH sequence is the basis of Elliott Wave anyway and it does not have to be that difficult to analyze price action.
A trader has to learn how to count his sequence of HH HL LL LH. As of yet I have not seen an indicator that does this properly. If you can do this you can use it to trade nicely. If you master it, you will be well on your way to recognizing and using the most useful parts of the Elliott Wave.

The first rule is:
A new LH cannot be identified until price moves past the previous high.
A new HL cannot be identified until price moves past the previous low.
To make charts easier to interpret this, I use Bill Williams Fractals to identify the LL LH HH LH turns in the market.
Review posts 8 to 11 for more information on the use of fractals and how to identify the sequence of waves in a Renko Chart.
Some notes of interest:

My charts will usually use a 10 pip Renko Bar. I will use a consistent template and the same broker for each chart. Variations, such as price differences from broker to broker and pip size of bricks make it difficult to compare charts.
If you have a question, post your chart and state your question clearly. Post a 10 pip brick chart if you can and state the size of the bricks.
As I continue this, I am going to develop a standard template to use.
I also hope to discuss some money-management strategies, use of free Virtual Servers and what I think of as semi- automatic trading - using robots that are suitable for Renko charts. I have spent the last few months really studying the potential of trading Renko Charts with robots and I think some of it is pretty good stuff.

So why am I sharing all this? Because I can.

I have tested the free Renko ea at http://www.pimpmyea.com/renko-on-build-600-solution/ and I
find that it draws charts that are essentially identical to the Fx Ovo Renko charts. I only noticed one
wick that was slightly different.

There are also instructions and videos at that site that assist in setting up the Renko off-line charts.

On the left is the fx ovo Renko and on the right the pimpmyea Renko. The only difference I could find
was with one wick. I will therefore use the fx ovo that I have been using for my charts and hope that
any differences between posted charts are not significant.

I'm happy for the reboot of this thread. I was waiting for it few long months. It is one of the most knowledge packed threads and that knowledge is on 14 pages not 1000.
I'm curious about your semi automatic approach as nature of renko makes it best traded with pending orders. But when the order is pending the second thinking begins (specially if one doesn't fully trusts himself).

Compare the highest part of your charts - they are different. The right one has big wick and more price action.

Ah yes ... I missed that additional difference between the two charts. Good eye Krystyn.

It is good to be aware that here are differences in the various off-line chart generators and these can have unintended consequences. As I said, I will use the ovo Renko generator and hope that the occasional difference between various peoples charts is not to significant.

The semi-automatic ideas that I have been working on will have to wait a bit, as I want to establish some basics first. If we all have the same templates and tools to work with it will be a lot easier. Not that my ideas are unique.

Mr. Nims (here on FF and also at TSD) has a good Renko system and there is a free version of the Renko HART ea worth looking at. Eventually I will present three or four systems, mostly using free eas already available in the public domain.

Stay tuned. I hope it will be worth the ride.

I once took a course in organic chemistry. I had to spend many hours of my own time (over the summer) studying for an exam on chemical nomenclature. I had to pass that exam before I could take the organic chemistry course. The professor expected us to arrive ready to learn and did not have time to teach us the very basic stuff.

Consider the next few posts as an opportunity to learn about some useful tools. I wont have an exam to sort you out and see if you have done your homework.
I also don't want to answer very basic questions over and over again. Don't come to a gunfight with a knife.

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Have a good look at the charts on post #265. You will notice a set of pink lines (vertical and horizontal) on the left hand chart and blue ones on the right hand chart. These lines are going to be an important part of our tool kit. The pink ones are generated by a script called Get Cross and the blue ones by a script called SetCross.

Here is an exercise to introduce you to these two scripts:

Set up any two charts on the same pair, using different time frames.
Have your charts displayed side by side.
Drop GetCross on one chart and Set Cross on the other chart.

You may have to zoom out to find the pink vertical line on Get Cross. Click on it to select it, then move it to the most recent candle.
Set both charts to be about the same in terms of the number of candles displayed on each. Now move the pink vertical line from side to side and watch the blue vertical line. Do the same with the pink horizontal line.

A search of FF will reveal the source of these two wonderful scripts.
(Thanks to the Sorex for sharing. http://www.forexfactory.com/showthread.php?p=4912062)

These scripts allow you to easily find a location on two different time frames - or on two different bricks size charts.

Next, set up two Renko Charts on the same pair, with different sizes of bricks. (I recommend 10 and 30 pip bricks and will mostly be using those sizes.)
Play with these two scripts and get familiar with them. You will be seeing them a lot.

As I further develop this thread, I plan to introduce the tools and eas that I have found useful. It will be difficult for a new comer to jump in and know what is going on, so I encourage people to do their homework before they start attending the classes. I wont be inclined to answer questions that have already been dealt with. I expect people to do a bit of homework.

At this point I expect people to play with Get Cross and Set Cross and become competent users of these two scripts.

Hi Wab

Done, the homework what´s next?

Hi Eurix.

I will post an update asap. Thanks for your interest.

Hi Wab,

Just wanted to let you know that I am also keeping an eye on the thread. As well as running one of renko 10 pips charts...

Thanks Juliuy and eurix.

If you have followed my thread this far you are familiar with the HH HL LL LH sequence of turns in a chart ... any and every chart.
These ultimately detail the Elliott Wave in a chart. EW is a tough study to gain confidence in, but let's take a shot at it in an indirect way.

You will need to open four charts:

Chart M1M2 is a M1 chart that generates an offline Renko chart that we will call M2.
Chart M1M3 is a M1 chart that generates an offline Renko Chart that we will call M3.

We will need four templates: M1M2, M1M3, M2 and M3.
Once we have these, it is easy to set up a profile. (I will use the GBPUSD in my example.)

In our profile we should have charts M1M2, M2 and M3 visible. (M1M3 is essentially the same as M1M2 so it can be minimized or hidden in the background.)

Next we put Get Cross on the M3 (30 pip bricks) chart and Set Cross on the M2 (10 pip bricks chart.)
Now we look at the M3 chart and do the HH HL LL LH analysis. We determine what the M3 chart is doing and try to establish what is in control.

On The GBPUSD Renko 30 chart we can see a reversal where price went through a LH level. Use Get Cross and Set Cross to easily identify this point on the M2 -10 pip brick chart. You can also drop the Set Cross script on the M1 chart and identify the same point there if you have enough data showing. (More on that later.)

Note:

I used the GBPUSD for this example because the M3 reversal was recent enough to be able to locate it on the M2 chart. As you do this exercise on several pairs you will find some levels are really a long way back and others are more current. In other cases (the EURUSD at the present time) the M3 is between a LL and LH but has not broken past either. Both the LL and LH are a long way back, so we note them.

For now will look for a pair with a closer critical point on the M3 30 pip brick chart.

The M3 breakouts that continue a trend are also important. We seek reversals or continuations on the 30 pip brick chart. These 30 pip brick locations are known to us well in advance of action on the 10 pip brick chart.

HH HL LL LH analysis on the 30 pip brick charts can thereby now be easily located on the 10 pip brick charts using Get Cross and Set Cross.

(On the M1 M2 Chart you can also see an indicator that displays a 10 pip brick overlaid on the one minute chart. Let's just leave that for now as there is lot to absorb here.)

So play with this a bit. Find some 30 pips turns and line them up on the 10 pip chart.

Observe what happens on a ten pip brick chart when the 30 pip chart makes a decision.

Hi Wab
I have a problem setting up 2 Renko Timeframes. My charts get frozen , maybe the used Renko EA is not the best. Which one do you use? Please help.
Thanks

Hi wolfsch

I hope this helps

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HI Wolfsch.

The one that eurix suggested above should work. I am using a commercial version of Renko but it appears to be almost identical to the pimped v4 version.

Make sure that you have two m1 charts, one for each offline chart.

Thanka a lot guys, I appreciale your help.

Can anyone make a median renko version .
Thanks for the work.

you mean a median renko ea?

http://prntscr.com/70ezjd

Ok. Why am I so interested in comparing charts with different brick sizes?
My attempts to develop, or at least test different eas on Renko charts, have lead me to believe that pretty much everything that I have tried thus far might make a good profit in a run but then give it back in a congested market. Unless you can determine the direction of the market flow and set your ea to take trades only in that direction, the eas that I have tried lose over time.
The HH HL LL LH rule is always there in a chart and a higher Time Frame or a Bigger Brick chart can tell us what to expect for direction for some time on a Lower Time Frame or Smaller Brick chart. When a bigger brick charts such as the 30 pip brick chart makes a reversal then a 10 pip chart is going to trend in the direction of that 30 pip brick reversal for a while.
At that point we can trade in the trend direction with an ea and avoid corrections that tend to cost us pips.
We can also monitor the Lower Brick Frame (LBF) to anticipate reversals in the Higher Brick Frame (HBF.) A LBF reversal will occur inside a HBF chart and either confirm or warn us of a reversal point on the HBF. With practice, you can even use fractals on the M1 chart to identify M1 reversals. Just study those a lot before you try to use them in conjunction with Renko reversals, as a M1 chart can reverse several times inside a Renko Bar. (I mention this because it is of interest, but only useful really if you plan to trade in M1 charts.)
Next, I would like to talk a bit about money management /strategy and how I like to try and relate it to Renko. For discussion purposes, I will stay with 10 pip bricks.

The rule of 72:
If you were paying attention that day in school you would have learned that you can divide 72 by the rate of interest that your deposit pays and determine how quickly you will double your money. For example if you invest money at 10% per anum, 72 / 10 = 7.2 years until your money will double.
How many bricks will it take to double an account, if each brick is worth 2%? Yes, 31 bricks, as long as each brick is worth 2% of your account when it is closed. Is it possible to get 31 bricks in a week?

I am presently in a run that has gone 15 bricks since I entered it, another that has gone 7.
With the 7 brick run, at 2% per brick, I have 14%. With the 15 brick run I have 30%.
72 / 30 = 2.4.
72 / 14 = 5.14.
Making your bricks worth a percent of your account becomes a very good strategy.
(Anyone who finds a flaw in the calculations please advise. I try not to make errors but I know I do. Or, I could just be seeing if you are paying attention. )