Renko charts – a bit of history…
Renko charts trace their origins to Japan where the actual word renko is derived from the Japanese word renga, which means bricks. Renko charts are are drawn in the direction of the primary trend and have a fixed, definable, size. They are similar to point and figure charts as each brick is the same size depending on the minimum amount per brick. So, in order to generate an opposite color, the fixed brick size of the Renko must be exceeded.
Renko charts can be very helpful when determining support and resistance levels since they isolates the underlying price trend by filtering out minor price changes. They are also very effective at identifying key support or resistance levels and are used to determine potential changes in price trend.
How RENKO works on MT4
The Renko plug-in for the MT4 platform enables traders to utilize RENKO bricks in their live trading.
When you attach the plug-in to a 1M time chart it will first create an offline chart for all historical 1M data by closest possible approximation and instantly start to create all following RENKO bars in real time!
The custom renko charts enable you to add indicators, trend lines, price levels, apply standard MT4 templates and even run EAs directly off the range bar chart. Just as you would on standard time based charts.
The product also features a script for backtesting renko charts using MT4’s built-in backtester.
The plug-in offers 3 operating modes for the renko charts (all modes are also available in the backtester) plus a Tick Chart plug-in: