Renko disregards time and trade volume to work exclusively with the price variations of a specific asset.
It is possible to select the Renko by clicking on the chart and typing the desired variation, clicking the (+) sign to open the search, or selecting the Renko with the chosen time period.
Therefore, set renko time frame as desired, where a new candle will only form when the programmed price variation occurs.
Settings
The smaller the timeframe, the greater the number of candles that may be displayed on the chart, and consequently, the details of the price variations will also be greater. And the larger the timeframe, the fewer the number of candles that will appear on the chart.
This feature is excellent for filtering noise. Since it works only with price variations, time and volume do not matter.
Another advantage is that with its price-based candle methodology, Renko can visually provide better moments to enter a trade.
An important characteristic is that this chart is continuous, meaning there is no kind of gap between the blocks, as the opening of one occurs at the closing of the previous one. Gaps can only occur at the turn of the day.
Finally, the Renko Chart is a trend follower. This is stated considering the fact that for a new candle to be created according to its settings, all variations must be in the same direction.
For example, in a 5R Renko chart on USATEC, each box should contain 4000 ticks, totaling 40 points. This happens because the platform uses the following calculation for the Renko size:
Renko Size = (Increment x (Period-1))
In the example we used, the period is 5, the increment is 10, therefore:
Renko Size = (10 x (5-1)) = 10 x 4 = 40.
Therefore, each box should contain 40 points, but for the formation of a new box, a movement of 40 points in the same direction is necessary. This rule is not valid when the movement is in the opposite direction.
For a reversal of direction to occur, it is necessary to move two boxes in the opposite direction from the closing of the previous box. In the example we used above, it would take 80 points, corresponding to double 5R minus 1 increment, for the price to form a box in the opposite direction to the original movement.
It is due to the subtraction of 1 increment used in the calculation that it will not be possible to select only 1R on the chart, automatically 2R will be pulled.
To obtain the increment values, go to 'View' > 'Asset Information'.
Highlighted in red we have the increment used for computing the Renko Size.
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