Renko Chart: A New Perspective for Traders

If you want to earn from trading, you need appropriate tools. While there are many tools that can be used, some of them help to understand price action better than others. Many traders still use traditional candlestick charts or line charts. However, these charts very often include a lot of market noise, and this doesn’t allow us to get a clear picture. However, the Renko chart helps to see all these trends in a new way. This chart type is more focused on price movement rather than time. This is how it differs from other charts, and this is why it shall be used if you want to have a clearer picture of the market.

A Renko chart uses bricks instead of candlesticks. When the price moves by a specific amount, a new brick is formed. This approach is what differentiates the Renko chart from other charting methods. It helps traders to focus on significant price changes and not get distracted by smaller ups and downs.

This chart helps traders to detect clear trends. The Renko chart also helps to detect support and resistance levels because it does not consider random movements. With it, traders can trade more easily and make trading decisions more confidently.

Renko charts also reduce emotional pressure. Traditional charts often create uncertainty because they show every small move, and this is what makes traders more nervous. With the Renko chart, traders can only trade based on significant price changes.

Advantage of Renko Chart

The Renko chart offers some benefits that most traders like. The most important benefit is its ability to remove noise from the market. The Renko chart doesn’t show every tick or candle. It displays only those price changes that meet the chosen brick size. This helps traders see the bigger picture more clearly.

Another advantage is that this chart helps to identify the trend. Many traders find it difficult to see when a trend begins or ends. The Renko chart shows a series of bricks in the same direction, and it makes the trend more visible. If bricks continue to be formed upward, the trend is bullish. If they form downward, the trend is bearish. This makes it easier for traders to detect trends and trade with more confidence.

Renko charts also help to identify support and resistance levels. The chart highlights strong movements, this is why levels where the price repeatedly reverses become more obvious. Traders can use these zones to plan entries and exits with greater precision.

Another advantage is simplicity. The Renko chart does not rely heavily on complex indicators. Instead, it gives a visual representation that is easy to interpret. Many traders use Renko charts along with moving averages or oscillators to confirm signals. However, even if the Renko Chart is used alone, it can provide strong insights.

It is easier to manage risks with Renko charts. Because they filter out smaller moves, traders can place stop-loss orders at more logical levels. This helps to determine when random price spikes happen and not react to them.

So, the main advantages of a Renko chart are noise reduction, clear trend recognition, easier identification of support and resistance, and improved risk management. These strengths make the Renko chart a very comfortable tool that can be used by beginners and experienced traders.

How to Add a Renko Chart to an MT4 Platform?

Many traders use MetaTrader 4 (MT4) as their main trading platform. However, the standard MT4 setup does not include the Renko chart by default. To use it, traders need to install an additional plugin or script. Fortunately, the process is simple and can be completed in just a few steps. First, download a Renko MT4 indicator or script from a trusted source. There are many free and paid versions available online. Then, open your MT4 platform and go to “File”, click on “Open Data Folder.” Inside, find the “MQL4” folder and then the “Indicators” folder. Copy the Renko file into this folder.

Next, restart the MT4 platform so the new indicator loads properly. After that, open the “Navigator” panel, and under “Indicators,” you should see the Renko chart option. Drag the indicator onto a standard chart, which is usually a one-minute chart, and you can generate the Renko bricks.

When you apply the indicator, a new offline chart will be created. To open it, go to “File”, then click “Open Offline” and select the chart labeled as Renko. This chart will now display Renko bricks instead of candlesticks. You can adjust the brick size in the indicator settings so that it suits your trading style. Smaller bricks show more detail, and larger bricks highlight bigger moves.

If you use Renko charts on MT4, you can combine the clarity of Renko with the flexibility of the popular platform. This setup enables Renko traders to apply their favorite indicators, analyze trends, and execute trades directly from MT4, and at the same time enjoy the benefits of Renko visualization.

Pros and Cons of Renko Chart

Like any trading tool, the Renko chart has both strengths and weaknesses. If you understand these pros and cons, you can better understand whether it suits their trading style.

Pros:

• Noise reduction: The biggest advantage is that this chart filters out unnecessary price action. The chart is much cleaner because it focuses only on important movements.
• Clear trends: Traders can easily see uptrends and downtrends. This makes it a strong tool for strategies that follow trends.
• Better support and resistance levels: Renko charts highlight strong moves, which is why reversal zones become easier to spot.
• Improved discipline: A Renko trader will not overreact to small price changes. It helps traders to keep their emotions under control.

Cons:

• Delayed signals: A new brick only forms after price moves by a set amount, this is why signals may appear later compared to candlestick charts. This delay can cause traders to miss early entries.
• No time element: Renko charts ignore time. This is why traders cannot see how long a price move took. For those who rely on timing strategies, this may be a disadvantage.
• Dependence on brick size: The effectiveness of the Renko chart depends on the chosen brick size. Too small a brick size brings back noise, and too large may hide important movements.
• Additional setup on MT4: Traders who use the Renko chart MT4 need to install extra tools, which can be inconvenient for beginners.

The Renko chart is very good for those who want to understand trends. However, this indicator is not perfect. A trader shall clearly understand where the balance between simplicity and limitations is, and combine the Renko Chart with other indicators. Only then, a trader can form a good strategy.

Conclusion

The Renko chart provides traders with a unique way to analyze the markets. Traders focus only on price movements. Unlike traditional candlestick charts, it eliminates noise and highlights only meaningful changes. For a Renko trader, this means clearer trends, stronger signals, and more confidence when traders place their trades.

The advantages of Renko charts include noise reduction, better trend identification, and easier recognition of support and resistance. If you want to add a Renko chart to Renko MT4, you need an extra indicator. But when you set up everything, it integrates smoothly with the platform. Of course, Renko charts are not perfect. They come with certain drawbacks, such as delayed signals and reliance on brick size. That is why many traders combine Renko with additional indicators or strategies to balance its strengths and weaknesses.

Renko charts offer a fresh perspective for traders who want clarity and simplicity. Whether you are a beginner who wants to understand market trends or an experienced trader who looks for an edge, Renko charts can be a valuable addition to your toolkit.