Renko Chart - How to Trade Using Renko Charts

Do you really have to consider the time or volume in your trades or you can also trade according to the price changes only? This question is the foundation of the Renko charts. Renko charts are invented by the Japanese. In this chart, time and volume has no role. Renko candles look like small bricks or boxes. They have no upper or lower shadows. We can change the box size in the Renko charts.

The smaller the size, the higher number of boxes and so more details of the price changes.This is the Renko charts of Euro-USD while the box size is set to 1:

And this is the same chart while the box size is set to 0.5 which means smaller boxes and so more details of the price changes:

Lets see the above chart with a higher magnification to see more details:

The above chart covers about 2 years from Sep 2004 to Sep 2006. As you see there is a limited number of trading opportunities in this chart. The technical analysis rules are the same in the Renko charts and you can enter a trade after a support, resistance or consolidation breakout:

Lets check a smaller box size and see if we can find more trading opportunities or not.

The box size in the below Renko chart is set to 0.1. As you see your can easily find good trading opportunities using the technical analysis rules:

Now lets compare the above chart with a candlestick chart. The below chart is the candlestick chart that covers the same period of time as the above chart. As you see the short trade could be easily distinguishable in the candlestick chart but it was a little hard to decide for a long position after that. Whereas the above Renko chart shows the long opportunity very clearly.

What does that mean? Does it mean that you can find more trades in the Renko chart?

I can not see any clear inverted head and shoulders in the above candlestick chart whereas it could be seen sharply in the Renko chart.

Another period of time with the Renko chart:

The same period of time with the candlestick chart:

So if you are a swing trader and you work with the big time frames like the daily chart, you’d better to have an eye on the Renko chart too. It seems it is a big help to confirm your technical analysis results and predictions.

Further Reading:
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