I have seen more and more forex traders abandon both bar and candlestick charts in favor of renko charts lately. And this trend seems to keep gaining strength. So I have to ask myself "What makes renko charts more appealing to these forex traders?"
I came up with a few different reasons. The first reason is a renko chart looks simple. They are easy to navigate. These forex price charts do not show the wicks that typical candlestick charts display. These boxes, also known as renko bars, allow the forex trader to easily identify the beginning and ending of trends. This is a very powerful advantage.
It has been stated as near fact that forex currency pairs establish great trends. Therefore it would be a great idea if traders could identify the beginning and end of such trends. This would represent an ideal trading entry and/or exit.It is important to enter a new trade at the beginning of a new trend. A good exit plan is to take profits when the trend shows signs of ending and turning around.
Currently, forex traders have a difficult time pinpointing trends on a bar or candlestick chart. Renko charts allows currency traders overcome this hurdle.Forex prices can whipsaw up and down in volatile markets. On a candlestick chart, this is represented by candlestick bodies with large wicks on each end. This suggests indecision and ultimately no trend.
A quick glance at any candlestick chart will allow you to find a period of price indecision. Price simply did not move out of a defined trading range. This range bound trading lacks a clear trend. Forex traders will have a difficult time entering a profitable trade during this consolidation.
Attempting to place winning trades during this time period result in frustration. One must be careful to avoid trying to re-enter the market too often in an attempt to overcome losing trades.
A forex trader utilizing renko charts would be able to find a trade setup during this price consolidation seen on either candlestick charts or bar charts.A bullish 10 pip renko bar appears and closes only after price has moved up 10 pips from the previous bullish renko bar. A bearish 10 pip renko bar, also known as renko brick, appears and closes after the current spot price has moved down from the previous bearish renko bar.
A bullish 10 pip renko bar, often seen as a white or green bar, will appear and close after a bearish 10 pip renko bar only after price has moved up 20 pips from the close of the 10 pip bearish bar. Bearish bars or bricks are often white or red in color.
Forex traders can find more opportunity for trading spot fx currencies with renko charts. I believe this is another advantage over typical charts and indicators.It is quite possible to find 3 or 4 good trading opportunities with a renko chart, versus maybe finding just 1 trade entry using a candlestick chart.
Any serious forex trader needs to seriously consider adding renko charts to his/her trading toolbox.
Tom Grennell is an avid forex trader and enthusiast. He shares his passion for this industry via his detailed writings and recommendations. His favorite Renko Charts Forex Trading System can be investigated further at Forex Renko Charts.
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