In this post, I am going to discuss about renko trading sytem. Reko trading chart has been developed by the Japanese. This chart is only associated with price movement, but time and volume are not included. Renko has come from the Japanese word for bricks, “renga”. You can construct a renko chart by placing a brick in the next column once the price surpasses the top or bottom of the earlier brick by a predefined quantity. In renko chart, White bricks are usually used when the direction of the trend is up, at the same time as black bricks are used when the trend is down.
Renko chart is very useful for traders to recognize key support/resistance levels. When the directions of the trend changes, Transaction signals are generated and the bricks exchange colors. The working principle of Renko charts is almost similar with Point & Figure charts, though they are easier to read and follow.
The Renko systems appear to be very good quality at caring you in the bulk of a major trend and at the similar time keeping your losses little. Though the system will make whipsaws but the whipsaws are usually more than made up when you grab a strong trend.