A type of chart, developed by the Japanese, that is only concerned with price movement; time and volume are not included. It is thought to be named for the Japanese word for bricks, “renga”. A renko chart is constructed by placing a brick in the next column once the price surpasses the top or bottom of the previous brick by a predefined amount. White bricks are used when the direction of the trend is up, while black bricks are used when the trend is down. This type of chart is very effective for traders to identify key support/resistance levels. Transaction signals are generated when the direction of the trend changes and the bricks alternate colors.
How do I create a Renko chart?
Renko charting is not built-in in MetaTrader so you’ll need to run either an EA or an indicator based Renko generator(my favorite one is attached below).
How do I trade using a Renko chart?
I’ll be posting some strategies that I found useful in trading Renko charts soon. Meanwhile you can download and load the Renko creator EA below:
To install RenkoLiveChart EA:
1. Place the ex4 code in the Experts directory.
2. Drop the EA on a live chart, preferably the 1 minute chart of any instrument e.g. EURUSD. Leave the default 10pip box settings. A comment will appear on upper left corner and will tell you which offline chart to open.
3. Under the Common Tab, make sure to check the “Allow DLL imports” and “Allow import of external experts” boxes (both of them). Check the “Allow live trading” box in the Live Trading section.
4. Enable the Expert Advisors button(turns to green color).
5. A smiley face will appear in the upper right hand corner.(check your steps again if you don’t see this)
To view the Renko Chart :
Click File -> Open Offline and pick the chart with M2 ending. If you dropped the EA on EURUSD then open the ERUSD M2 offline chart.