How to Trade Forex With Renko Charts
Renko Charts enable traders to focus on more important and stronger trends by filtering out minor and irrelevant price moves. They can be used independent of time, and hence, they suit all kinds of traders – from intraday, swing to long term traders. Let's take a look at everything you need to know about Renko Charts in depth.
What are Renko Charts?
Renko Chart is a technical indicator that provides strong market trend directions by filtering out minor price movements. It is derived from the Japanese word ‘Renga’, which means bricks as all the price changes in a Renko Chart are plotted and measured through bricks.
- These bricks represent currency pair prices and are created at a 45-degree angle to each other, making the graphical representation uniform
- They show market trends and enable traders to make entry or exit decisions accordingly
Types of Renko Charts
1. Open/Close Renko Charts
The Open/Close Renko Charts represent currency pair prices between the opening and closing exchange rate.
- When the closing price is more than the opening price in an uptrend and the currency is trading near but below the closing price, it signals traders to go long with a continued uptrend expectation
- When the closing price is less than the opening price in a downtrend and the currency is trading near but below the closing price, it signals traders to short the trades with a continued downtrend expectation
2. High/Low Renko Charts
The High/Low Renko Charts represent currency pair prices between the highest price level and lowest price level. These charts consider each and every currency pair price action behavior in a specific period of time.
- During an uptrend, when the current currency pair prices are near to the highest price level (within the high/low range) of the Renko Chart, it signals traders to long the trades with an expected continued uptrend
- During a downtrend, when the current currency pair prices are near to the lowest price level (within the high/low range) of the Renko Chart, it signals traders to short the trades with an expected continued downtrend
How can you trade forex with Renko Charts?
1. Support and Resistance Renko Charts Strategy
The Support and Resistance Renko Charts Strategy is a breakout strategy which identifies the areas where the currency pair price breaks the support or resistance levels. It enables traders to enter or exit trades once the currency pair price breaks above the resistance or below the support price level.
- When the current currency pair price breaks the support level and falls further, it signals traders to short the trades due to an expected future downtrend
- When the current currency pair price breaks the resistance level and rises further, it signals traders to long the trades due to an expected uptrend
- In a support breakout, traders can place a stop-loss order above the top price level that was created before the breakout occurred
- In a resistance breakout, traders can place a stop-loss order below the low/bottom price level that was created before the breakout occurred
2. Trendline Breakout Renko Charts Strategy
The Trendline Breakout Renko Charts Strategy looks for breakout levels to time ideal entry or exit points in the market through trendlines. A trendline is a combination of various currency pair price moves in a specific time period. The strategy helps in precisely defining market trends made from the trendlines that follow either an upward or downward direction. When the Renko bar breaks beyond or below the trendlines, it signals traders enter or exit the market accordingly.
- If the first Renko bar breaks above an uptrend trendline and the second Renko bar moves even beyond the breaking bar, it signals an expected uptrend and tells traders to long the trade.
- If the first Renko bar breaks below a downtrend trendline, and the second Renko bar moves even below the breaking bar, it signals an expected downtrend and tells traders to short the trade.
- The stop-loss order during an uptrend can be placed above the most recent high price level that was created before the breakout
- The stop-loss order during a downtrend can be placed below the most recent low price level that was created before the breakout
How to get Renko Charts on a Meta Trader?
- Download the MQL4 file that the Renko Chart indicator supports.
- Move the downloaded file to the ‘expert’ folder of the MetaTrader software.
- Restart your MetaTrader platform and open the Navigator panel.
- Maximize the Expert Advisor panel on the MetaTrader in its navigator panel to spot the Renko Charts file.
- Click on the Expert Advisor or Auto-Trading button present on the top bar of your Metatrader software.
- Drag and drop the Renko Chart file onto the forex chart in which you want to incorporate the indicator.
- The settings window of the Renko Chart will open immediately, where you can change or modify the settings as per your requirements.
- Open the Common panel and allow the indicator to ‘allow live trading’, ‘allow the import of external experts’, and ‘allow DLL imports’.
- The Renko version of the forex chart will appear on the top right corner of the existing chart.
- You can choose the time frames and the brick sizes on the upper left corner of the MetaTrader platform to chart using the Renko Charts successfully on the MT terminal.
Use Renko Charts today to identify clear market trends
Renko Charts are an uncomplicated depiction of the real market trends and provide traders with ideal buy and sell signals. You can start trading with Renko Charts on Blueberry Markets and benefit from competitive spreads, 24/7 customer support and a real-time price tracking mechanism.
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