Renko Charts - Why Forex Traders Prefer Renko Charts Over Candlesticks

For the last 12 months, Forex traders by the thousands have begun switching from "normal" Candlestick and Bar charts over to Renko Charts. This begs the question "Why do Forex Traders prefer Renko Charts over Candlesticks and all the other normal charting methods?"

The answer is simple: Renko Charts remove all the noise and confusion that are a common part of Candlestick and Bar charting, and allow Forex traders to easily spot the beginning and end of literally every short and long-term trend that develops on a Forex chart.

FOREX

One of the undisputed truisms about Forex trading is that the Forex pairs trend better than any other investment vehicle around. A key to successfully trading any Forex pair is to get into a trade when a new trend develops and ride it out until the trend collapses.

The problem faced by Forex traders is that Candlestick and Bar charts do a poor job of identifying trends 80% of the time. A choppy market can result in a half-dozen or more 15 minute Candlesticks with small bodies and large wicks on each end, with no trend visible.

For instance, if you were to look at a 15 minute Candlestick chart of the EUR/USD for the time period of 9:00 a.m. to 12 noon Eastern Time on July 12, 2011, you would notice that price remained in about a 40 pip range, with no distinct trend apparent. If you were trading off of the 15 minute charts, in all likelihood you would not have placed a single trade due to the lack of any strong signals being present.

Renko charts would give you an entirely different view of this same time frame. Because Renko candles only close once price has moved "X" number of pips in one direction (and you can set "X" to any pip size you desire) instead of seeing a period of erratic price movement you can now see several trade opportunities within the high and low prices that make up that price range.

Looking at the same time period from above using 5 Pip Boxes on the Renko Charts, you would have seen 8 trades develop, each one moving into profit from 5 to 25 pips before stalling out and turning around. Renko traders easily made more than 60 pips profit during the same time frame that Candlestick and Bar Chart traders deemed untradable.

No longer are Forex traders forced to sit for hours waiting for a single trade signal. With Renko Charts, traders can now find as many as 5 or 6 trade opportunities in a single hour, where Candlestick and Bar chart traders see none. For those Forex traders who have a limited amount of time to trade each day due to jobs and other outside time constraints, Renko Charting is the answer to their prayers.

Renko Charts - Why Forex Traders Prefer Renko Charts Over Candlesticks

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