Get to know more about what Renko is and how to use it
Some say that the renko chart is a powerful chart for trading trends compared to using candlesticks. If so, why is this chart not in the MT4 default? The following is a further discussion about renko and how to use it.
Renko is a graphical display of the trading terminal. When viewed visually, this price indicator graph will be similar to a brick series or in Japanese it is called “renga”, which is why it is called renko. Renko chart popularity because it is judged to look neat, unique and very minimalist.
Here are pictures of differences in renko and candlestick:
If you look at the picture above and see the difference, the most striking looks when the bar starts to appear. On the usual candlestick chart each bar will appear depending on the time frame. As for renko, the frequency of occurrence at each bar will not depend on the time frame, but purely because of the pip movement.
You also need to know that there will be no time frame on the renko chart.Therefore the variable that will be used to adjust the frequency of occurrence of the bar will depend completely on the pip movement.
Each bar on the renko chart above will usually only appear when the market has moved 10 pips. However, to change the color or change direction will require up to 20 pips. This will certainly make you able to change the variables as you like. As in the options panel for the following MT4 indicators:
How do you renounce MT4?
- First, you can download the rename file first, then open MT4
- Then, open the “file” menu, click the “open data folder” section
- Look for the MQL4 folder then click the “indicators” folder
- Copy paste to renko.mod file and enter it in the “indicators” folder
- Close MT4
- Then you can search and pair the renko indicator by: clicking the “insert” menu -> “indikators” -> “custom” -> renko.mod
- Set the configuration section of the indicator then leave it to the default options section
- Open a new chart in the “file” menu then click “open offline”
- You can choose a chart that matches the instructions in the indicator section, for example pairxxx.m2, the time frame will not affect how to use the renko chart.
Use of Renko
Because renko does not use the time frame, the sharpness of its technical analysis will depend entirely on the user’s understanding of price action. Because this will be one of the considerations that are considered very important, because renko chart can filter noise better than candlesticks during the continuity of the trend.
- Identify demand and supply
Bars on the renko chart that are squeezed into one range can be one of the references to be able to determine the demand and supply areas. For example, like the following picture:
If the demand price starts to move down and approaches the supply area, there will be pressure for the buyers and will become more dominant. This means that when the opportunity to make a purchase will be even greater. But on the contrary, when prices start to move up close to the supply area there will be pressure for the sellers and will be more dominant as a result of increased opportunities for sales.
- When the trend is in progress can maintain the first position
To get as much profit as possible by maintaining a position is considered quite difficult if you use a conventional candlestick chart because there will be noise that is considered very high. Therefore, with the help of the renko chart, you can maintain a position so that you can pursue take profit as long as the price has not touched the supply.
- Can confirm when a breakout will occur
When a breakout occurs for the support and resistance limits, often a beginner trader will find it difficult to ascertain whether the price can break the boundary or just test the S / R limit. With the use of the renko chart the price direction will appear to be clear because the noise on the renko chart will be smaller compared to the candlestick chart.
Lack of Renko Chart
Although at a glance the use of the renko chart will be more neat and also free from noise but that does not mean that this chart has no shortcomings. Here are some shortcomings when using the renko chart that can be your consideration:
- Renko cannot be used as an entry guide
The renko chart in fact only shows the interval in price movements in the pip and there is no timeframe and open, high, low and close. So you are likely to experience difficult conditions to be able to find out when and at which point the price level will open a position. Therefore it is highly recommended that you keep your entry using conventional candlesticks.
- Cannot show the existence of price action dynamics accurately
A further drawback is that because this bar chart does not use open, high, low and close as one indication of the price, there will not be much dynamics for price action that can be analyzed. You can compare with candlestick patterns, tens or even hundreds of them. Whereas if you look at the renko chart, you will only be able to find out one bar chart that is representative of a number of pips.
Basically the renko chart will indeed provide an alternative price chart with the main benefit for filtering noise so that you can easily determine which trend is still going on without having to interfere with the appearance of fake signals.However, to be able to determine where your entry point still requires a candlestick chart.