Difference between Range bars and Renko bars. - page 2
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Hi Forex_for_life,
I really like your explaination and your concept on the wrong use of "fixed" range/renko bar size.
You suggest to " use something that gives you the RANGE of each pair based off certain parameters " . Can you elaborate more about this idea ? Do you mean to use a kind of ATR to calculate the "current" range bars size ? or something else ?
Krgrds
Fabio
Though this might rub a few people the wrong way, it's truth and must be said: The vast majority of those who use Range/Renko, use them incorrectly. Because of ignorance, they commonly use 10 pip bars or another fixed value for the input. This, in my opinion, is as equally difficult to trade as say a recalculating/repainting indicator. Reason being is that when the range is that small, though it looks beautiful historically, quite often in the majority of those moves, several of those bars formed in mere seconds, making it unrealistic to think that this could be traded real-time, efficiently and effectively. This, as a very good friend of mine says, "....only serves as mental masturbation
I suggest figuring out how to normalize across pairs i.e. use something that gives you the RANGE of each pair based off certain parameters.
Hope this has been of some help to some bodies.Hi Forex_for_life,
I really like your explaination and your concept on the wrong use of "fixed" range/renko bar size.
You suggest to " use something that gives you the RANGE of each pair based off certain parameters " . Can you elaborate more about this idea ? Do you mean to use a kind of ATR to calculate the "current" range bars size ? or something else ?
Krgrds
FabioThat's spot on, Fabio. Equalizes the charts across diff instruments vs. just taking shots in the dark. Any other ideas?
Peace to Sarran Bit.....
Hello Max,
Could you indicate where to get these 2 indicators?
Thank you.
Philippe.
Complex subtelties
Hi Mike78,
The noise is coming from the only source capable of creating it - the 10 banks that make up 80%+ of trade volumes. The retail forex trade is far less than 5% of total volume and the pro trader tries to make money in between the fancy moves of the banks against each other. You have to assume they have algorithms that allow them to place $100M orders at most favorable pricing by making the market dance using moves to confuse the best and most widely used indicators. Renko's cut through most but, not all of this intentional confusion.
As an example, try using 7 pip Renko bars on the EURUSD. If you are using a platform that will allow you to see the "tails" of the Renko bars, you will be able to see the banks periodically drive prices to what a trader would use as an effective trailing stop at about 14 to even 23 pips during the course of a nice price move. This happens with enough frequency to seriously dampen some otherwise great profits and they know it.
DEADEYE.
I used to believe the same thing, but it is not simply true; everything has noise in life including TSD-forums, its just a good idea to have the right tools, on the chart, to trade very well. Just think about it, if you wanted to have it off with a female, would you put a wall between the two of you, just because she is very loud and will put you off! (sorry may be not a good example). My background is shares trading from tick charts and a very successful one, but I wasted so much time in forex trying out "far-fetched" systems.... luckily I found what I needed and trade well on a 1MIN chart...so my motto is if doesnt not work on a 1MIN chart, I havent got time for it....but thats just the life of a pivot trader..
regards,
MikeI think that there is probably some validity to both of your view points. The ForEx is after all a 'Zero Net Sum Loss' market. Not at all like many other investment vehicles where their are set interest rate profits, dividends etc. So every dollar that is made came directly from somebody else. With the BIG players having enough clout to manipulate the market to their advantage, they are of course going to cause movements that make others lose that they can then gain.
Most, if not all of the (retail) brokers claim that they 'never play against us' as why would they? They supposedly make their money strictly off of the spread. Recent changes to US regulations have shown that in many cases, this is clearly not the case. Especially if one is not using and ECN or STP brokers and thus have a 'Dealing Desk' that can and do manipulate and change the charts in real time constantly to their advantage.
This week alone, their have been numerous announcements of law suits and prosecution of a number of ForEx brokers for blatant and very substantial RipOffs. I've heard of 2 in particular and heard another announcement of 13 more being enacted, though I have yet to hear confirmation of this from other sources.
The retail ForEx market 'eats most of us' entirely and there isn't even anything left to spit out! )< 8(
Buyer Beware indeed! With so much InterNet over hyping Retail ForEx of 'overnight wealth' it has lost virtually all credibility. We know that long term successful (retail) ForEx traders are VERY conservative and know that this is about the long haul and thus trade accordingly using very conservative money management that NEVER puts very much of their account at risk. But most of these traders have 1% ~ 2% and perhaps VERY occasionally going as high as 5% at risk when something is really hot and they have the experience, knowledge, capabilities, self discipline and confidence to do so.
Most NuBs are usually WAY over leveraged and pay the price for it. Most would do a lot better in the long run utilizing a 15 to 10 or perhaps a 25 to 1 leverage rates rather than up to a 1000 to 1 leverage! YIKES! Be VERY afraid if you are one of these people. It's not likely that you will last long.
Slow, steady, cautious and conservative wins these races over the long run.
(8 >) Prosperous Trading (< 8)Hi Mike78,
The noise is coming from the only source capable of creating it - the 10 banks that make up 80%+ of trade volumes. The retail forex trade is far less than 5% of total volume and the pro trader tries to make money in between the fancy moves of the banks against each other. You have to assume they have algorithms that allow them to place $100M orders at most favorable pricing by making the market dance using moves to confuse the best and most widely used indicators. Renko's cut through most but, not all of this intentional confusion.
As an example, try using 7 pip Renko bars on the EURUSD. If you are using a platform that will allow you to see the "tails" of the Renko bars, you will be able to see the banks periodically drive prices to what a trader would use as an effective trailing stop at about 14 to even 23 pips during the course of a nice price move. This happens with enough frequency to seriously dampen some otherwise great profits and they know it.
I think that there is probably some validity to both of your view points. The ForEx is after all a 'Zero Net Sum Loss' market. Not at all like many other investment vehicles where their are set interest rate profits, dividends etc. So every dollar that is made came directly from somebody else. With the BIG players having enough clout to manipulate the market to their advantage, they are of course going to cause movements that make others lose that they can then gain.
Most, if not all of the (retail) brokers claim that they 'never play against us' as why would they? They supposedly make their money strictly off of the spread. Recent changes to US regulations have shown that in many cases, this is clearly not the case. Especially if one is not using and ECN or STP brokers and thus have a 'Dealing Desk' that can and do manipulate and change the charts in real time constantly to their advantage.
This week alone, their have been numerous announcements of law suits and prosecution of a number of ForEx brokers for blatant and very substantial RipOffs. I've heard of 2 in particular and heard another announcement of 13 more being enacted, though I have yet to hear confirmation of this from other sources.
The retail ForEx market 'eats most of us' entirely and there isn't even anything left to spit out! )< 8(
Buyer Beware indeed! With so much InterNet over hyping Retail ForEx of 'overnight wealth' it has lost virtually all credibility. We know that long term successful (retail) ForEx traders are VERY conservative and know that this is about the long haul and thus trade accordingly using very conservative money management that NEVER puts very much of their account at risk. But most of these traders have 1% ~ 2% and perhaps VERY occasionally going as high as 5% at risk when something is really hot and they have the experience, knowledge, capabilities, self discipline and confidence to do so.
Most NuBs are usually WAY over leveraged and pay the price for it. Most would do a lot better in the long run utilizing a 15 to 10 or perhaps a 25 to 1 leverage rates rather than up to a 1000 to 1 leverage! YIKES! Be VERY afraid if you are one of these people. It's not likely that you will last long.
Slow, steady, cautious and conservative wins these races over the long run.
(8 >) Prosperous Trading (< 8)Good insight, DougRH. Preciate the input on the thread!
The facts mentioned are the very ones that sometimes make me wonder if I should be looking at E-Mini's or Futures. I used to think that the 24hr / 5.5 days open, unregulated, leverage-full exchange were points that made Spot Currencies better than other markets. It was only with experience that I began to understand what role opening bells (trading the daily breakouts) regulation (VOLUME and OPEN INTEREST) and little to no leverage (only using what you can afford to lose) played in a market's nuance. Success in Forex can be had, don't get me wrong, but I think there are other markets that make for much better opportunities depending on goals.
Back to Renkos. They do assist in cuting through alot of the fluff IF used properly but I notice that, typically, traders set the box size way too low, putting themselves right back into the same challenging environment as from which they thought they were transitioning. I think this "14-23 pip" stoploss hunt issue could be overcome if that "error" is addressed. I prefer the M15 to H1 equivalents for Renko charting. No lower than M15 because too much noise and no higher than H1 because of MT4 inability to handle large amounts of historical data without it spring a memory leak and coming to a crawl (unless you have 8gb of RAM and a SSD drive).
Only other challenge I see, when going to larger bars, is that the formation becomes less and less uniform. On an H1-style Renko chart, it may be 2, 3, 4 hours before the next bar forms. In this case, if not using an automated strategy, a new bar alerting indicator (that wasn't programmed to just be a time-dependent alarm clock but instead solely a watchdog, indiscriminate in the manner in which they formed) becomes mandatory.
How've you been using them, if you don't mind sharing ideas. What about anyone else?
Hi, I know this is an oldish thread but it may be useful to someone... The "New candle alarm" for mt4 that can be found all over the net works great with renko bars, it will alert you when a new candle is formed. Really useful.
Where is everybody?
How come there is no more discussion on Renko or Range bars?
I have a few questions that I am unable to find answers to it. Hope someone can help.
1) Why do I see wicks on Renko bricks?
2) Why in some Renko charts the next Renko brick always open at the mid point of the previous brick while some Renko charts show bricks with head after tail?
3) There are gapped range bars (usually 1 pip) and gapless range bars built by different EA, indicator or script. What is the reason for gaps in constant range bars? Does that mean price does not exist in between range bars?
the aim of renko's bars is to filter out the noise. they show information more clearly.
How come there is no more discussion on Renko or Range bars?
I have a few questions that I am unable to find answers to it. Hope someone can help.
1) Why do I see wicks on Renko bricks?
2) Why in some Renko charts the next Renko brick always open at the mid point of the previous brick while some Renko charts show bricks with head after tail?
3) There are gapped range bars (usually 1 pip) and gapless range bars built by different EA, indicator or script. What is the reason for gaps in constant range bars? Does that mean price does not exist in between range bars?Hey Swordfish,
Just happened across my old thread. Figured it better late than never to answer your questions:
1.) Wicks on Renko bricks are important as they provide a realism that if often not readily apparent in Renko brick charts w/o wicks. The wicks show the full range of the price within that bar. What do I mean? For example, if the brick sized used was 10 pips/points and price moves 9 pips/points in a single direction before reversing and going a full 10 in the opposite direction, would that 9 pips in the initial direction be rendered totally invalid? Depends on the school of thought to which you attend. There may be major implications from an S/R standpoint. Imagine if you were trading 25 pip/point brick sizes. 24 pip move in one direction before reversal may occur. It's better to know what happened if things don't work out then be left playing pocket pool to calm your nerves after an unexplainable loss.
2.) There are different types of Renko charts.
You first have true Renko, which is the heads to tails / tails to heads. There are some who swear by these type of Renko charts but a large number of individuals do not like the fact that it takes 2 full bricks to indicate a reversal, meaning your exits lose a full brick size of pips/points before closing. So, to use the 10 pip/point brick size example: If you are in a trade and am in open profit of 20 pips/points, if a reversal occurs on the next bar, you can bet your bottom dollar that you won't get a reversal signal, no matter the indicator you're using. So you have a few options: First, close out of trade on close of next brick for a gain of 10 pips/points, barely breaking even on trade once spread is factored in. Second is to hold the trade and experience a loss of the full 20 pips previously in profit AND the spread, equaling a net loser instead of break-even. Hold the trade and it be continue in previous direction, resulting in a winner, minus the 20 pips that have to be given back if a reversal signal is used instead of a fixed target. How do we remedy this within the parameters of using Renko brick charts?
You began to get into the idea of changing where the new brick opens in relation to last brick. In "Median" Renko brick charts, it's just as it says: the next brick opens at the median of the last brick. So if using a 10 pip/point brick size, the next bar would open at the middle (or 5 pip/points) of the last brick, creating a situation where reversal lag is reduced. A group that has taken this logic (no pre-pun intended) to the furthest denominator is one by the name of "Pure Logik". They've created a Renko brick chart setup that allows you to chose WHATEVER percentage you want for your opening price on a chart. So you can have traditional Renko, "median" Renko, anti-Renko (0% open) and everything in between. I tried to upload screenshots to provide visual support of the statements made but this is the first post I've made on this forum in years plus they've completely changed the layout and though it seems like it'd be straight-forward, I used the "insert image" option, chose the image, hit "Upload Image" button but nothing happens. So I'll just post a link.
Home
The only downside for most members here is that this is available only on NinjaTrader. Also, I am in no way affiliated w/ this group beyond the fact that I appreciate what they're offering as it relates to Renko charting.
3.) The reason gaps are shown in some Range charts and not others is the same logic as the answer given in the first response: Some see certain pieces of data as trivial and others see it as important so options are given to eliminate, include, or alter the way it's reported/displayed.
Hope I answered all of your questions...