Whether or not you need additional indicators to trade on renko charts. This is a frequently asked question. And if that’s the case, what indicators are best for trading with renko charts? Here’s the best indicator to use with renko charts.
What Are Renko Charts?
Renko charts, as you may know, are solely based on price. When it comes to this unusual chart type, time, which is plotted on the x-axis, is irrelevant. The renko bricks plot the price bricks based on the number of pips price movement, which you can determine yourself. You may be aware that the best indicator is the price itself. As a result, traders don’t really need any additional indicators to determine the price action and patterns that are formed.
Traders have a better chance of capturing prices at a good level to enter into a trend if they have a good understanding of the financial markets, such as identifying trends, price highs/lows, retracements, and so on. Renko charts can help you scalp the markets even if you don’t use indicators. Whether you’re looking for 10 pips or 100 pips, renko charts make it possible depending on the type of technical trading strategy you use. It is entirely up to the trader to decide how they want to conduct their renko chart analysis and how large they want their bricks to be.
When trading with renko charts and especially without indicators, money management or risk management can be used. Because of the nature of reversals in renko boxes, traders who can position themselves in a trade based on understanding the price and other technical patterns are more easily spotted in this chart type can benefit greatly.
A renko box reversal, for example, occurs when prices move in the opposite direction twice the size of the box. As a result, the risk of a reversal is always twice the size of the box. For example, a 10 pip renko box requires 20 pips, and so on. Using this information, traders can plan their trades ahead of time and set a minimum take profit of three times the renko reversal, or 60 pips in our example. This effectively puts the risk at 20 pips and the reward at 60 pips, resulting in a risk-to-reward ratio of 1:3. Conservative traders can use a risk-reward ratio of 1:2, such as 20 pip risk for 40 pip reward.
Regardless of whether you use indicators or not, the same principle can be applied to renko chart analysis. Traders can develop a money management strategy that allows them to consistently make profits. What is the best technical indicator to use with this chart type, as we mentioned earlier? Using moving averages and an oscillator, or Bollinger bands and an oscillator, is a good option.
Forex forums are frequently overrun by renko traders who employ complicated indicators. It doesn’t really help, and it doesn’t give you a competitive advantage in the markets.
To summarize, traders don’t really need to use additional indicators to trade renko charts profitably, as outlined in this article. Having said that, there are a few technical indicators that are particularly well-suited to renko charts.