Setting Up and Trading Off Of

Renko Charts
Hi everyone.

Here is a “down and dirty” .pdf that will get you started using Renko charts while I get
the videos re-shot and re-edited. Renkos are a different way of looking at price
movement, without all the “noise” you get from a normal candlestick chart. They are so
smooth and clean, it really makes trading simpler for most of the people who are exposed
to the Renkos for the first time.

But enough of the sales talk. Here is what you need to know about setting up the charts.

INDICATORS

You have two indicators as a part of this package. One is an .mq4 file, the other an .ex4
file.

Both should be copied into your Indicator folder, which for 99% of you will be located at
c:/ProgramFiles/MT4BrokerName/experts/indicators (replace MT4BrokerName with the
name of the broker who supplies you with your MT4 charts).

If you’ve used the MT4 charts for more than a day, you should already know how to
download or copy custom indicators into your platform.

TEMPLATE

This package also comes with a Template. You should copy it into the Template folder
found at c:/ProgramFiles/MT4BrokerName/templates. Again, replace MT4BrokerName”
with the name of the broker who supplies you with your MT4 charting package.

SETTING UP YOUR FIRST RENKO CHART

This may seem a little complicated at first, but trust me, it’s not rocket surgery. You just
have to follow each step in order and your charts should work properly the very first
time.

First, choose a pair. I’ll use the USD/JPY as an example (and use U/J as the designation
from here on out).

Open a One (1) Minute Chart for the U/J. Do not change from bar to candlesticks, or
make any other changes. Just open the chart as it comes from the MT4 factory.
Next, Load the RenkoLiveChart_v2.1 Indicator onto the One (1) Minute Chart you just
opened. You load it by clicking on the “Insert” tab at the top of your platform, and in the
dropdown box that opens, click on “Indicators”, “Custom” and then on
“RenkoLiveChart_v2.1” An Input Box will open, and under the “Common” tab, make
sure you check the box which reads “Allow DLL Imports”. Then click “OK”.

If the indicator loaded properly, the following message should appear in the upper left
hand corner of your One (1) Minute Chart (and in very small print):

“RenkoLiveChart(5): Open Offline USDJPY, M2 to view chart”

As long as you can see that message, you are in business!

For now, leave the One (1) Minute Chart open.

Next, click on the “File” option in the toolbar that runs along the top of your MT4
Platform. In the dropdown box that opens up, choose “Open Offline”.

Another dropdown box will appear, and it will list pretty much every single chart you
have ever opened using that particular platform. Look for the list of U/J charts, and
among them, look for an M2 chart (meaning a 2 minute chart). Click that chart to
highlight it and then click “OPEN”.
You will now have a second chart open on your screen, which is the Two (2) Minute
Chart created by the Renko indicator. On this chart, right click your mouse to open the
standard dropdown box, and choose “Template.”
From the next dropdown box, click on Renko and your chart should now look something
like this:

Now you can MINIMIZE the One (1) Minute Chart. DO NOT CLOSE IT. Just
Minimize it.

If you want, you can now open a second Renko chart on a second pair by following the
same exact instructions in the same exact order.

Or in the alternative (especially if you are only working with one monitor) you can open
a 5 minute U/J chart (switch to the Candlestick view for this chart) and you can watch
and compare prices and movements on the Renko chart to what is taking place on the 5
minute chart.

IMPORTANT POINTS TO REMEMBER

There are a few things you need to understand about the Renko chart in order to use it to
its full potential.

First, the time bar along the bottom of the Renko chart is meaningless. This particular
Renko indicator works in 5 pip price increments, which means when the price falls 5
pips, a new Red candle will form. If price moves up 5 pips, a new blue candle can form.
Since price can easily move up or down 5 pips in under a minute, you could see 5 or 6
Renko candles where you may only see one standard 5 minute candle.

The flip side is also true. If price is simply flat, you may see the same Renko candle for
10, 20, 30 even 60 minutes, while the standard chart will issue a new candle every 5
minutes.

All you really need to know in order to figure out where the moves match up on the
charts is to look where price peaked or bottomed out on the Renko chart and match it up
to the concurrent spot on the standard chart.

A second, and frankly more important point to remember is that you need to open the
Renko charts and let them run for a few minutes before they will start putting out
accurate information. It takes the charts a short while (5 minutes or so) to get up to
speed.

So if you shut down your computer overnight, and restart at 8 a.m., the “previous” Renko
moves you see on your charts probably won’t match up to anything you see on your 5
minute standard chart, at least for a few minutes.

So start the Renkos and go get yourself a cup of coffee, and let them have the time they
need to start producing accurate information.

PLACING TRADES

These are just some ideas on how you can use Renko charts to place trades. You may
find better or easier trading methods after you’ve spent some time experimenting with the
charts. So don’t look upon this as a set of rules, but more as loose guidelines.

As I noted in the “quiz” information I sent to you, the most aggressive way to trade these
charts is to enter the trade as soon as a new color bar appears. So if you are at the end of
a 6 Red Bar downtrend, and a blue bar opens and closes, as soon as it closes you would
send in a BUY order.

And remember, these bars will open and close once price has moved 5 pips, so
sometimes you will have what seems like days to enter the trade, and other times you will
literally have only seconds to get in before a second bar closes.

But for those of you who are constantly asking me to teach you how to find a simple 10
pip trading system, this is probably the best shot you have at finding something that
meets your needs. There will be dead times when price only moves up 5-10 pips before
dropping back down 5-10 pips, and stays in that tight range for a while.

But if you will trade during the peak hours (an hour before and two hours after Japan,
London and the US markets open, you are going to find plenty of 4 and 5 bar trades,
which represent 20-25 pip moves.
This is without using any other indicators, or worrying about support and resistance lines,
or anything else. It is just trading after the first red or blue candle you see. You get to
+10, you get out. If that is your daily goal, you are done for the day and can now move
on to more enjoyable ventures, like mowing the lawn or cleaning the toilet.

Of course, if you are looking for more than 10 pips, you can certainly stay in the trade for
as long as you can stand it. But understand that for every 50 pip move you see on the
charts, there are a half dozen or more moves that go no further than 15-20 pips before
turning around and wiping out your entire position (and that is not scientific fact, but just
my gut estimate based on years of chart watching).

So if you are up +20, don’t let greed override your good sense. At the very least move
your stop-loss to break even (or +2…you should always get at least a couple of pips for
your trouble, especially if you’ve just seen +20).

But if you find yourself in a trade where you’ve seen the price move 20-25 pips in your
favor (lets say in a Sell trade) and you suddenly get a Blue candle as profit taking ensues
and price retraces a bit, Do you jump out? Do you hang tough? What do you do?

This is where a MACD, or an RSI or a CCI might come in handy. Not for entries, but for
helping you decide when or if to exit. I don’t have an opinion on the matter at this point,
and am more inclined to tighten up my stop when I see that first Blue candle. If price
turns around and starts back down again, I will move my stop to the top of the Blue
candle and see how much further down I can ride it.

After you’ve spent a couple of days watching Renko charts, you’ll notice that in just
about every big move, there are 2-3-4 single opposite color candles interspersed in the
trade, and that once price resumes moving in the “right” direction, it rarely comes close
to the price represented by that ‘wrong” color candle again. This makes it an excellent
Stop Loss price, and as a new ‘wrong” color candle appears, only to see price move away
again, you move your stop one more time, locking in another 20-40 pips on the move.

And as for an initial stop loss, you simply place your stop blow the lowest opposite color
candle in the previous run. So if you have 5 red candles, and then a Blue candle opens,
set your stop below the lowest of the previous red candles. This should be not much
more than 10 pips away, which is a reasonable stop to use if you are only looking to
make 10-20 pips, and certainly reasonable for pairs like the U/J or the EUR/USD which
tends to be less volatile than pairs like the GBP/JPY or the EUR/JPY.

This should be enough to get you started. I will cover more information in the videos,
and in the webinar I will schedule in the coming days.

If you have any questions regarding trading ideas, or using additional indicators to fine
tune your trading with Renko, by all means send them in. It will probably take me at
least a day to get back to you, maybe a bit more, depending on how much trouble these
videos keep giving me. What I will do is compile all the questions into a second pdf,
and/or answer them at the webinar, so that everyone gets the benefit.

Just send your questions to jeff@simple4xsystem.net