Trading Renko Charts by Suri Duddella
This charting technique can be used to display trends that
may not be that obvious in a bar or candlestick chart.
Renko charts were invented by Japanese traders
hundreds of years ago and named for renga, a
Japanese word for “brick.” How are they different
from bar or candlestick charts? First of all they are
visually attractive, making it easy to filter noise and isolate trends. They show symmetry and are effective in determining
the major trend and support & resistance areas. Renko
charts are also efficient in signaling trend-reversal patterns.
WHAT ARE THEY?
Renko charts are another way of representing price changes.
They display trends in such a way that may not be obvious in
a bar or candlestick chart. Renko charts are able to suppress
the noise display and produce uniformity in the underlying
trend. Although useful, renko charts also produce whipsaws
and have serious trading caveats, but overall there are advantages
to renko-based trading. One is that a trader tends to stay
in a trade longer than other trend-following techniques.