Animal Farm (Renko system)

Indeed, the line in the sand, at which we know what to expect next. or where to re-think our analysis.

Have a good weekend too. Raining here so I will likely be back-testing some ideas on brick sizes.

On smaller brick sizes like 5 (which I know is outside the parameters of what has been discussed before) I can see that for example the break of the green E-line gives a long opportunity and the stop could be the previous red line. You may get whipsawed a few times but when you get one of those long runs it sure does make up for it, specially if you trade DAX like I do.

This thread getting better and better every day - can't wait for the next instalment, particularly as it's weekend and I get the time to test and play around with stuff.

I have been experimenting with setting the brick size to the spread. Some interesting things to think about there.
Saddle points between the bid and ask being one of them. Hmm.

Wab,

One of my Renko EAs that I have recently purchased as stated in their Manual that the majority of people have not woken up to the fact the spread defines the brick size and setting a brick size to 10 is usually wrong due to the Brokers spread is usually larger especially after the UK session. Now I believe this company and have great success with their version of the renko brick and would recommend the user should always adjust the brick size to the spread per currency pair. If the size is smaller and/or larger you loose the entry and exit points and eventually money..

Cliff

The spread affects your trade result for sure, but why should the Renko brick size relate to the spread?
If you record your trades statistics, you may exactly determine which setup is still suitable for the particular spread size - i.e. what is the minimum SL/TP distance to accept the spread cost. It might have relation to the brick size - if the strategy uses it - but not so simple as you expressed.

I'm still trying to learn all the options within OVO but I believe there is an option which determines the best brick size based on certain parameters.

I'm speaking primarily as a DAX trader which has high volatility most days but some of the forex pairs vary a lot day to day so I guess it makes sense to look at a brick size based on say ADR/ATR over a certain number of days and keep that under review on a daily/weekly basis. I don't think (unfortunately) that one size is gonna fit all.

Renko brick size is dependent upon the brokers spread only. I have a Broker that allows fixed spreads during the UK session and right afterwards the spreads varies within the US session. Now the general rule of the thumb (guidance only) is any spread below 10 use a 10 size brick. But the tricky part is the spread does not stay static unless its fixed....so you could be trading and all of the sudden the broker changes the spread (especially news periods) and bang there goes your brick size... trading is complicated and that's why a few make it due to the amount of complications.

Open the MT4 Market Watch window, click a currency pair and opposite click and a separate window will pop up and click "spread". A third column will appear with the relevant currency pair spread size. It varies and so will your trading results.....

I second Halley.

If we consider a spread of two for example a ten pip brick is affected by 20% and a a 2 pip brick by 100%. You can either plan around a 20% hit on an initial move of one ten pip brick or a 100% impact on a 2 pip brick. If using smaller bricks gets you out from under the influence of the spread more quickly by reducing risk, locking in a quick profit and allowing smaller stops than that is fine.

Like buying eggs by the dozen versus buying them one at a time. Spend the same money and you get a dozen eggs either way. Buy the eggs one at a time and you never risk dropping more than one of them at a time. Buy them by the dozen and risk dropping the whole lot.

I have a friend who trades Renko very successfully and he uses the biggest brick size that he can.

Again it is the way that you read the charts. The observations about RM and HH HL LL LH apply to any chart and it just becomes a matter of patience. On a Ten pip brick chart you can see one brick that lasts for many hours then a whole succession in a few minutes. On the larger brick sizes a single brick can last for ages.

Larger bricks require larger stops. Smaller bricks move more quickly and need smaller stops and that is the appeal of the smaller brick size. My idea is to enter on a smaller scale and trade the larger bricks.

( I will get to a way to do that in due time, but it requires a future lesson in price action.) I will draw your attention the fact that every Renko chart has a M1 chart lurking behind it.

Ovo and other Renko generators may also adjust brick size using the ATR. I am honestly not an expert on many of these things and still learning. I have experimented a lot and have made some very interesting discoveries that I am sharing (and will share more of) but there is obviously a lot more for me to learn about Renko.

To illustrate. Here is a chart that shows all of the classical Alligator, RM, Saddle Points and larger degree HH HL LL LH count. The vertical dotted lines show the daily time frame. Brick size is 50 pips. Some days have as little as one brick and others ... even Brexit conforms to our price action structure.



If you use 1000 pip bricks (go ahead and try it) you will cry because you didn't know where that red E line was on Brexit day. But, could you have afforded the stop to trade it? Not with such big bricks. So that requires a way to get in on smaller bricks which I will discuss in future posts.

Think of trading an H1 chart and getting in to the trade on a M1 chart at the point where M1 turns and the whole time structure then follows: M5, M15, M30, and finally H1. All following the lead from M1. Can we do that with Renko?

Stay tuned. We will get there, but more price structure to be learned first.

If you are curious about how long a brick takes to form, you can put Renko AM on your Brick chart an it will tell you.

Set the threshold to 880 and add some levels, 60 for H1, 240 for H4 etc. You will see at a glance how many bricks take eight hours or
longer to form.

Compare the time a brick takes to form in a trend/impulse wave versus a corrective wave and it is interesting.

What we want to do is catch those trends. We don't really care about speed as much as distance.

Having said that, no one wants to watch a brick that waffles around for eight hours.

Wab,

Why are you discussing time when a Renko only works off of price action or movement. Time has no relevance and the only reason we use a M2 chart is to attach the Renko chart structure to an insufficient MT4 platform (it is free for a reason). The size of the brick should represent the spread only which enables exact positioning and representation of the actual currency pair in real-time (at the moment - real indicator). MT4 platform was originally designed as a time platform which is why its has M1 to Monthly time differences. Which is why most people discuss time frames - how many bars per the hour, etc. The only true indicator is price action everything is a lagging indicator (after the fact). Renko cleans up the excess noise (fluxuation of the market) and makes a bar based on the size and only closes after completing the size (exacting price action) - time is irrelevant).

We are trend surfing the marketplace by using a price action tool (Renko) by monitoring 2 or more bricks and up to 10 bricks (on average) in one direction to enable the objective of capturing pips. Keep it simple and sweet with the least of amount of indicators. There are many people trying to design an EA with Renko but I believe you will run into reversing issues due to MT4 inadequacies which is why we have an EA converting MT4 chart into a Renko chart to begin with.

Manual trading for retailer traders is king, small quantity of pips per day keep the debts at bay... an average trader can easily pick off 100+ pips per day off of the 3 main trading sessions if they are dedicated and disciplined.

Thanks for listening, off on vacation now.

I am well aware of the time-free aspects of Renko charts and how M1 charts produce M2 Bricks. Nonetheless it takes time to form a brick and that is of some interest, especially if you are manually trading a Renko Chart.

I brought time into the discussion because we were debating brick sizes and it is interesting to see that some 10 pip bricks take many hours to form. Even a very,very small sized brick can take over an hour to form on occasion.

This thread is price action in regards to Renko and I introduced Road Map to help illustrate the concept. Once you are good at it, RM is not needed as you can soon visualize the chart structure with practice.

At a future time (no pun intended) I will show you how to use that M1 chart as an aid to analysis and entry on a Renko Chart - not just as a generator of M2 charts. Check back in and follow along, it is a slow but steady journey to a few new ideas.

My mind has gone officially blind. Thank you.

Just when I thought I can try and visualize some elements on my charts you came and stirred everything up all over again.
I hope my aging mind can follow

Still packing so not a lot of charts and I'm at work and can't connect to my home PC at the moment.


As to Renko.
I'm using the teeth and Fibo expansion to gauge E lines and forks, it has been hard but I think I'm getting somewhere with it. I have tried various brick sizes, smaller than 10 is a no go for me as I'm working all of LO and most of NY so I can't be glued to my cellular screen all day, everything is way too fast for me, I have seen nice HHLL formations on the 5 pips brick charts but the TP (and SL) are too small for my taste, those who can trade in lots can appreciate a 3 pips profit, me... well, I'm yet to build my capital. And there's work, of course, and the levels at which I can place pending orders and my broker's spread, all which makes trading lower brick sizes less appealing for me, not until I have some solid to work with and I'm still learning.
I've also tried trading the ATR bricks, couldn't afford the big moves and everything was so slow that even the nice profits didn't cover for it, not for the losses and not for the time.
So I'm trading a 21 pip brick charts now with mild success (until an EA or me not following the news wipe out said success) and I like this setup. Someone once told me that it's better to trade on weird brick sizes because when everyone is trading a 10 pip brick setup, they all see nearly the same things, given, of course, broker feeds differences.

I hope I'll have the time to post the XAUUSD chart later on tonight (a 100 points brick size equals to a 1$ brick size), everything on it looks like counter trend in regards to the AO, yet the trend is eminent and I'm not sure how to read it.


Wab, I'm not a coder, I can barely read code, but I think what you are looking for is inside the Out_TL function. It takes width as an input and looks for an impulse or else for outputting the lines. The regular is width 4 and the impulse is based off mas_ish_ZZ that I cannot comprehend. I'm still not sure how the creator came to calculate everything.



I hope I'll have time to test all this new ideas. Always ready to improve and better myself.
Thanks

Hello Rea.

I know I have posted a lot of material but I think that lots of chart examples will help make it easier to follow the elusive structure.
All of a sudden you see the structure and it gets easier to use it from there on.

It is a bit like those pictures that you have to look at to see a hidden picture inside it.



The various debates about brick sizes and so forth are of interest and I stand to learn as much as anyone in that respect.

The problem with brick size is that volatility varies with market sentiment, some weeks a pair or instrument may be exhibiting soaring ADR, and later decline.
I think it's best to be flexible with brick size, then to have a "MTF" approach.
I just added the AO to my charts to see what difference it would make, and it looks promising, and the OVO Omnia Remote add-on makes it easy to switch between brick sizes as time frames.

I prefer the Renko with wicks to the mean Renko, I have not been able to see the advantage in the mean renko.
Here is an example of how the AO renders the trend and a copy of the AO indi used.

Then it turned again.

I should have been in that short move but I like the move pulling back early on, so I stayed out, guess there were some orders waiting to be filled that the market makers could not resist.

Hello All,

Wab, thanks for the picture I never did that but it's one of the items on my bucket list.

On with the charts.
I switched to 10 pip bricks to be as close as possible to the narrative of this thread, I hope I can keep up with it.

USDJPY
Not a good entry, in my opinion, I, myself, would have waited for the previous -3 for an entry. Still running, let's see how far it can go.


EURJPY
A lot of trades, most of them are from my basket EA, the entries between -1 and -3 are the ones I've placed on this chart. I think it would have been better to wait for -4.


XAUUSD
And than there's this.
It's in a messy shape and I'm not sure how to trade it well.


[EDIT]
Both USDJPY and EURJPY went to SL.

Don't know what happened. But sometimes you just get real lucky. Noticed a nice pin bar on the 15min chart which I run alongside my renko. Also the Higher brick size renko was giving the same reversal though not yet fully formed. Waited for the renko signal and placed a slightly larger than usual trade due that pin coming off the hi for the day. Placed a target that I thought might be possible due to divergence. Added a BIG percentage to my account in about 30 seconds.Just left my computer to close the door and stop the wind when Kapow! Money in the account.
Wab there is a beer in my fridge for you if you ever get to Downunder.
Glad it didn't go the other way! Stops are important to protect your account! Put my stop a bit above the last Hi.
Trade well. I get the rest of the day off after that one.

To encourage those who struggle with trading. I hope this song helps.

Batavier,

Nice move
What brick size are you using? My looks very different than yours.



Thanks.