Every experienced trader or investor who is well acquainted with the foreign exchange market will tell you that almost all trading tactics of the market are impossible without using information on Japanese candles. Virtually any value can be indicated on the basis of the obtained data. For example, patterns, reversal patterns or horizontal levels.
But, one way or another, the use of Japanese candles has its drawbacks. Very often, the player observes market noise - a so-called phenomenon that may affect future indications of indicators: it is likely that they will give false testimony. And this, whatever one may say, reduce the profitability of trade, reduce the effectiveness of the player and in any case, reduce its profitability.
To avoid the likelihood of market noise, you can use the strategy of graphs Renko. It differs breadth of directions and a universal methodology when working with trading tools. But what are the graphics of Renko?
Renko's graphs are such graphical models on Forex that are created with the help of bars of identical area. If you look at and analyze any trading chart, then using the Renko charts you can once again (on the next or the hundredth) confirm that the Pareto rule really works. Approximately 80% of the entire trading day is in a flat state, while the remaining 20% is due to changes in the trend and its movements.
Renko's graphs are the most favorable option for recognizing and identifying new market trends. For example, if in our monitor we can see how the "bricks" line up one after the other, in increasing order, then this is evidence of an upward trend. While the movement of black bars (down the course) will be a signal for a downtrend. In other words, a trader can easily exclude the lateral state of the exchange (he is a flat).
What is the secret?
In reality, everything is extremely simple. This is due to the fact that Japanese bars are subject to temporary exposure. Everything is about the time frame that the trader has established himself. For example, if trading is carried out on fifteen-minute charts, then a new candle arises every 15 minutes. In the event that none of the factors have an effect on the price, then it is located in one place and near the already formed brick, a new one appears, at the same level.
It is also worth noting that the Renko charts do not have a time dependence: most of all they are subject to the distance of passing the price. And one more advantage of the chart: the option of avoiding false signals - factors that indicate a reversal of the price trend.
The advantages and disadvantages of the system
The main advantage of using such charts is the possibility: the ability for the player to be aware of all the events that occur on the market. This is an ideal option for novice players: beginners are very keen on exploring the market.
The slightest change in the bar, for example, its color, can guarantee a small but income for the player when the deal is opened or the trend declines or it closes during the rising period. In order to create income, we do not need to conduct complex technical manipulations - to analyze in detail or test automated robots or new indicators: the Renko schedules will give you the opportunity to work and earn, regardless of what is happening on the market.
Among the advantages we can name the following:
- an easy method for determining the trend direction;
- reliability of painted bars: they are guaranteed to form;
- You can exclude market noise: trade is more calm;
- a set of advisers or market indicators that are "sharpened" for graphics;
- almost absolute absence of false testimony.
As for the principles of creation, the Renko graphics can be built both automatically and manually, using independently selected parameters (the main one is the optimal bar size).