What is Renko's chart?
The Renko graph shows only the price movements of the asset, unlike other graphs, which usually also show timing and volume. The title of the graph developed by the Japanese comes from the Japanese word reng , which means "brick". The graph consists of bricks, each of which represents a number of awards. Every time the final price exceeds the extent of the previous brick, another brick is added to the Renko chart, which can show price movements of currency rates or stock prices. Usually one color represents movement down and the other color represents the upward movement. A regular chart based on the timing of prices could show drastic drops or climbing with long rectangles, thereby moving prices relatively less pronounced. Renko bricks also test small price movements smaller than brick size, which makes trends easier. If Brick is watching a series of climbing bricks, the trader could quickly decide to sell his assets.
The Renko graph sometimes shows fake signals, for example, when prices suddenly return to the previous direction, which is also known as the Whipsw effect. For example, this is seen when the trend chart has several bricks that show moving down, and then moves up again. In order to minimize the risk of losing from the effect of the whip saw, investors using the Renko chart often wait for at least two or three bricks to indicate a new direction before purchasing or selling asset.
The investor can modify the size and color of the Renko brick graph according to its preferences. The graph with smaller bricks has a larger number of bricks and shows more in more prices. The new brick is added to the graph only if the price change is completely filled in Brick. For example, if the size of bricks is $ 5 (USD) and the price is only $ 4, then no new brick is added. Traditionally, they are brick black when trendy price movement down and are white when trends up but the investor can adapt color and more belowThe robality of his chart Renko to meet his needs.
Renko graph usually uses final prices at the end of the day. It can also use high/low prices that prefer white or up-trend bricks. Regardless of the current direction of bricks, a graph that uses high/low prices, ignores daily prices if high prices allow the addition of new white bricks.