When trading on the financial market, you may need a tool that helps to remove market noises generated by different candlestick charts. This is where Renko trading strategy may come in handy. It helps to trade with a focus on the price that isolates the trend as well as removes the time element. The Renko charts strategy will mainly suit those who actively trade on the market. They may include scalpers and day traders, as they often have to deal with the market noise.
The key benefit of the concept we are going to review is the ability to keep the focus on the price action. The strategy itself comes as the time-independent tool that can be used across various trading instruments and types of assets. In this guide, we will introduce the Renko Forex trading strategy with tips to read the charts.
Renko Charts Strategy Explained
As well as any other strategy, this one depends on charts. Before we start using it, we need to understand how those charts work and what information they can deliver. Unlike the majority of other patterns (for example, Japanese, charts) that are plotted using volume, price, and time, Renko charts are used only to evaluate the price movement and come up with accurate measurements. As stated earlier, it does not have time dimensions.
What’s more, the concept relies on bricks (Renko means “brick” from Japanese). So, traders will have to deal with so-called brick charts. The strategy was developed by Steve Nison. He is known as the inventor of modern candlestick patterns. Despite the fact, it has some things in common with traditional Japanese charts, traders need to consider one crucial difference: Renko bricks come in smaller sizes. This fact makes it even easier to read the chart and come up with better decision-making at short notice.
We have stated that the strategy mainly works for day traders, and this is true. However, Renko Forex trading strategy can be applied to any timeframe, which adds flexibility. The main idea is to help traders define the market moving area.