What is a Renko Chart?
Quick Answer: A Renko chart builds same-sized bricks whenever price moves a set amount, filtering noise and highlighting trend direction without time.
Understanding Renko Charts
Renko charts filter out time and focus solely on price movement. Bricks of equal size are added only when price moves a predefined amount, creating a clean view of trend direction and eliminating much of the noise seen on candlestick charts.
Why Traders Use Renko
- Trend clarity: Bricks stack neatly, highlighting higher highs or lower lows without intraday clutter.
- Support/resistance: Horizontal brick clusters reveal levels with minimal ambiguity.
- Breakout confirmation: A series of bricks past a level can signal momentum more clearly than choppy candles.
Setting Brick Size
Choose brick size using ATR, volatility measures, or fixed pip values. Smaller bricks capture detail but introduce noise; larger bricks smooth fluctuations and focus on major moves. Adjust size to match the timeframe and volatility of the instrument.
Combine with Other Tools
Use Renko for structural mapping and a time-based chart for execution timing, volume confirmation, or news awareness.
Limitations
Because time is ignored, Renko can lag during fast markets or surprise events. Some platforms recalculate historical bricks, making backtests unrealistic. Validate strategies with forward testing and ensure your software keeps brick history consistent.
Watch Liquidity
Illiquid instruments may print erratic bricks due to gaps. Stick to well-traded pairs or adjust brick size to account for wider spreads.
Related Terms
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