Aggressively Simple Renko

Hi everyone.

I have been working on something for quite some time and want to start sharing my trading.

For anyone who has followed my posts, you will know that I always practice on a live account, and I am quite happy to share the nuts and bolts, the good and the bad. Over the years I have been reasonably profitable, but nothing that has really pleased me.

After finally cracking offline charts and understanding the massive world in front of me, I have been working with Mean renko charts, matched with a firm plan around trade management, and aggressive money management, I believe that I have combined the best of all worlds which will maximise profits and remove a lot of risk.

My forward testing back testing (haha!), which is basically running forward through historical charts with the future blind, to replicate actual trading, I have now come up with the results purely on the Dow Futures market. Current testing shows something similar on other markets, and this is what the statistics show:

124 trades
70 winners
2 Break even trades
56% win ratio

If you don't think that is particularly impressive... wait one second and read on....

biggest pip gain from one single trade - 1410 (that is ACTUAL PIPS, NOT 141.1 pips... The Dow does not have decimal places!)
biggest pip loss from one single trade -135

​Average win 321 pips
Average Loss 97 pips
Average Risk reward is c. 1:3

Total pips lost: 5051
Total pips gained: 22483

And the important bit (as quite frankly the above figures are arbitrary to this figure....)

Based on trading Dow Futures only... using 0.01 lots (which equates to $0.05 per pip, or point):

Start balance: $500
End Balance: $4288.25
approx. 750% balance increase

This is the equity graph over time:



This was built up over a long time, a couple of years worth, but that equates to about 1-3 trades per week on average depending on what happens on the chart and what happens during the week, news events etc.

One last thing, I have a trading plan for this, but it is not optimised yet. The average loss is around 135 pips but this is based on a set and forget stop loss until a HL or LH is produced which is when the SL is moved. As it is, I will be testing what happens if I move the trade to BE after 50 pips is hit, or 100 pips is hit, or something along those lines. The figures show no preservation of winning trades, some that can go up as high as 400 pips, and then turn around and go to a full loss of c. 100 pips... a 500 pip turnaround is pretty hard to take! However in my testing, if the trade goes up, and goes past the entry point, I can not remember anyone of these trades going to be a winner.

That is of course not to say that some trades - for whatever reason, simply go against you as soon as you enter the trade and go to full loss... they are not uncommon, but easily managed with the decent risk reward and also averaging in as the trade progresses...

I will start sharing trades as I enter them... it is a very simple method, but the money management is the real powerhouse behind it as well as the trade management...

My Trade explorer is up and running, so you will be able to see all the trades... one thing though, the DOW futures are not recorded in the trade explorer as pips, only as a monetary figure, although I will be keeping a running tally for myself as I trade!

Average trade time could be anywhere between a day to a month depending on the trade progressing.

Let me know if you are interested in hearing more.

Moi, I am all ears!

Fine. I Love Renkos and simplicity, so lets read more from your System. Subscribed

Count me in.

Here's the problem if you trade the e mini dow well its 5.00 per tick and starting with 500 which you need for day trade margin. If you have a draw dow on 97 which is your average would cause margin call. If you plan to hold overnight the margins a lot higher. I know this cause I day trade the e mini dow for my living

Sorry but you are incorrect. As mentioned, I trade at the beginning of the strategy with 0.01 lots (or contract size) I trade the dow futures also ( you can also see in the trade explorer that I have traded 6 times at lots of 0.01 which equates to 0.05 dollars per pip...

I believe he trades CFD.

I trade the Dow Jones 30 Futures index as well as the forex markets - the exact futures that I trade are here: http://www.fxpro.co.uk/trading/trade-currency/%23dj30.

These are the mini sized Futures! hence the ability to trade 0.01 lots at a time!

Why not to trade futures market directly with your system Roland ? much less of disavantage excepted the balance

Your risk reward ratio of 1:3 is amazing.
Even a mere 30% of success/win rate will make you profitable.
Wish you success with this system.

Simply because I have everything set up on mt4- and I can trade forex and futures with my broker from the Same platform... With the same charts!

I don't see any advantage over the way I am trading at the moment. Bearing in mind that. Spread could be max of 5 points... That represents a round turn of 0.5 dollars... When I am targeting on average 300 points.

I think that they are all valid questions, but this should be a bout he trading not the set up of the account! As with all things financial related, everyone need to do their own due diligence and find something that suits them. I appreciate the questions but I looked hard to find something that was affordable and suitable to me and this does the job! Trading be futures market directly as far as I could find out required 1 contract minimum which was to expensive to start out on the risk settings that I want to take and on a live forward test. I would need to invest 10 times the amount, which is not something I would want to do on a test.

I have firm rules around testing of systems...

1. Develop a system (I did not develop what I am using here by the way)
2. Understand the system
3. Backtest and optimise the rules
4. perform a forward back test and track the statistics
5. Start to perform live trading in test account (500 dollar capital) Trade explorer is live and fully public... no skeletons!
6. Optimise the trading plan...
7. Start to invest more capital in the system up to the point where there is little point in investing, as it should be healthily sustaining itself.

But above all else the money management side is crucial, and this is where any system, or trading strategy succeeds or fails.. This is in development forever!

The R:R is based on the overall performance of the account, not on any one given trade, ie the actual final R;R on any one given winning trade could be 1:1 up to 10:1. But the larger trades also have adding to positions to capitalise on strong trends, so you take more (usually) from one trade. There are times when you only have one position open that runs to a 1:5 R:R... I will get into that when some trades happen.

The risk is defined basically 2 renko candles (MEAN renko candles that is), so the risk should always be 100 pips... Although entry times can vary, hence the 135 max loss on the one trade.

There is no defined take profit, that is managed within the rules where you take the profit, but the system ticks over relatively nicely. You do have to have to be patient when you have 3 or 4 losing trades of 100 pips each, only to get 3 or 4 trades with 900, 600, 300 pips gain... That is where the power lies in this system.

It needs to be judged on long term profitablitity (and I bang on about it, but the money management side of it is CRUCIAL!) Fixed ratio trading will not provide anywhere decent enough returns.

In actual fact, half the reason for sharing this, is to promote good money management (NOT TRADE MANAGEMENT... Ie managing the trade to B/E, Trailing stops etc)

So, first trade has been taken on USDCAD.

This is a buy trade, and the rationale for entering was on these reasons:

1. price above moving average
2. Stochastic going above the 20 level

As I said, it really is as simple as that!!!

The fun stuff comes when we start managing the trade, when we have had a few winners, and when we start adding to the position.

Stop loss is currently 100 pips, and it will stay that way until we get confirmation to move it (at 200 pips I will go to break even, as I want to cut down on the losing trades, but want to give plenty of room for trades to run their course) or we get taken out... It is as simple as that.

I also have a pending order for the Dow futures (please note the lot size !!!)

Due to the money management side of things, and the massive growth potential, I am not that concerned about 'right entries' but more about entering at a half decent point... support and resistance is not taken into account for this. The 'right' entry will be part of the optimisation of the trading plan.

Just thought I would give this as an example of the power of this system...​

Just to the left of my trade from the end of Feb to the end of March - 1 month there was about 1255 pips to be had from 3 trades.



To break even on this, I could have had 12 losers in a row of c. 100 pips (give or take a few here and there!), and this would have brought me back level on pips with next to no management

Some of the comments have dropped off... User error of course!

But basically after order 3 is opened, some risk has been reduced on the second order, by about 20 pips or so...

I was wondering what the Alpha is, given that the Dow returns typically positive, it makes sense your Win Rate is >.5

I also recommend presenting the Sharpe ratio (Return / StandardDeviation) would make your strategy appeal to portfolio managers incorporating MPT (moder portfolio theory) in their investment strategy.

And the Dow trade was opened up.

I have marked out where the other trades would have been over the last month or so, as you can see, it is relatively simple and easy to get the pips in. Of course, there are no losing trades here yet, but there will be!!!

how much EMA?

Nice Trade. I too also Renko fan. What is your settings ? Entry exit?

So your brick size is 66,6 pips? Based on sl behind 2nd brick. Or brick size 50 pips and sl behind 3rd brick?

​Its a SMA 25, but that is only the starting settings, as this will be optimised going forward - I was looking at the EMA, but too be honest it didn't add much, and didn't really like the way it was performing out of the box.... it will be looked at in a bit more depth going forward.

As I say this is only the live test at the moment...