If you’ve ever stared at a 5-minute candlestick chart and felt like you were watching a heart monitor for someone having a caffeine-induced panic attack, you’re not alone. I spent three years of my life convinced that the “noise” of the Forex market was actually a secret code I just hadn’t cracked yet. Spoilers: It wasn’t. It was just noise.
The day I switched to Renko charts was the day I stopped trading like a frantic squirrel and started trading like a human being. If you’re tired of being “whipsawed” out of perfectly good trades by a single erratic wick, grab a coffee. I’m about to show you why I threw my candlesticks in the bin and never looked back.
The Day the Candlesticks Broke My Heart (And My Account):
Let me take you back to a Tuesday morning. The EUR/USD was trending, or at least, I thought it was. I had four indicators screaming “BUY,” a 15-minute chart full of long wicks, and a mounting sense of dread. Every time a new candle opened, my heart skipped. Was this the reversal? Was that wick a fake-out?
I entered long. Three minutes later, a sudden “news spike” created a giant red wick that stopped me out, only for the price to immediately reverse and hit what would have been my Take Profit. I didn’t lose the trade because I was wrong about the direction; I lost because I was distracted by time.
Candlestick charts are slaves to the clock. Whether the price moves 100 pips or 0 pips, a new candle is born every 5, 15, or 60 minutes. This creates a cluttered visual landscape where “dead” time looks just as important as “active” price action.
What Exactly is a Renko Chart?
The word “Renko” comes from the Japanese word renga, which literally means “brick.” Unlike candlesticks, Renko charts ignore time entirely. They only care about one thing: Price.
Think of it like this: If you tell a Renko chart that your “brick size” is 10 pips, the chart will not draw a single thing until the price has moved a full 10 pips.
- If the price stays in a 9-pip range for three days? The chart doesn’t move.
- If the price shoots up 50 pips in two seconds? The chart instantly draws five bricks.
This simple shift changes everything. Suddenly, you aren’t looking at “what happened at 2:00 PM.” You’re looking at “what the price actually did.”
The Anatomy of a Brick:
Every brick is uniform. There are no long wicks to scare you, no “Dojis” to overanalyze, and no gaps. Each brick is drawn at a 45-degree angle to the previous one. A green brick means the price moved up by your set amount; a red brick means it moved down.
Why I Switched: The 5 Major Game-Changers:
1. The Death of Market Noise:
In Forex, “noise” is the enemy. It’s those tiny 2-pip fluctuations that trigger your anxiety and make you close a winning trade too early. Renko acts as a high-pass filter. It blocks out the static and only shows you the signal. When I switched, I realized that 70% of what I was “analyzing” on candlestick charts was actually irrelevant garbage.
2. Support and Resistance Are Suddenly “High Definition.”
On a standard chart, support and resistance levels are often “zones” cluttered with wicks that overextend. On a Renko chart, these levels are incredibly crisp. Because the bricks are a fixed size, you can see exactly where the price “bounces” or “stalls” with mathematical precision.
3. Trend Following Becomes “Boring.”
They say “the trend is your friend,” but candlesticks make that friend look like a drama queen. Renko charts turn a trend into a beautiful, rhythmic staircase. As long as the bricks stay green, you stay in. The moment a red brick forms, you have a clear signal that the momentum might be shifting.
4. Psychological Peace:
This was the biggest win for me. Trading without the “ticking clock” of a 1-minute or 5-minute candle reduced my cortisol levels by about 90%. I no longer feel the need to stare at the screen every second. If no new brick has formed, nothing has changed. I can go make a sandwich.
5. Mechanical Entry and Exit:
Renko allows for a “rules-based” approach that is hard to achieve with candlesticks. For example: “Enter on the second green brick after a red brick.” It’s binary. It’s objective. It removes the “I feel like it’s going up” element that kills so many accounts.
How to Set Your “Brick Size”:
The most common mistake beginners make is picking a random brick size. If your brick is too small (e.g., 2 pips on GBP/JPY), you’re back to square one with too much noise. If it’s too large, you’ll enter the trend way too late.
The ATR Method (Recommended):
I use the Average True Range (ATR) to determine my brick size. This allows the chart to adapt to the current volatility of the specific pair.
- For Scalping: I set the brick size to 20% of the daily ATR.
- For Swing Trading: I set it to 50% or even 100% of the daily ATR.
My “Go-To” Renko Strategy for Forex:
I don’t trade Renko in a vacuum. I combine it with a few simple tools to ensure I’m not caught in a “whipsaw” during consolidation.
The “Trend-Stepper” Setup:
- The Chart: Renko (Brick size: 10 pips for EUR/USD).
- The Indicator: 20-period Exponential Moving Average (EMA).
- The Filter: RSI (14).
The Rules for a Long Trade:
- Wait for the price to be above the 20 EMA.
- The RSI must be above 50.
- Enter when you see two consecutive green bricks form after a pullback toward the EMA.
- Stop Loss: Two bricks below your entry.
- Take Profit: Ride the trend until a red brick forms OR the price closes below the EMA.
What They Don’t Tell You About Renko:
I’m an advocate for Renko, but I’m not a liar. There are trade-offs.
- The Lag Factor: Because you have to wait for a full brick to form, you will always enter a trade slightly later than someone using a 1-minute candlestick chart. You’re trading “precision” for “certainty.”
- No Volume Data: Traditional volume indicators are mostly useless on Renko because the “time” element is gone.
- Choppy Markets: In a sideways, “ranging” market, Renko will print alternating red and green bricks. This is called a “whipsaw,” and it can eat your account if you don’t use a filter like a Moving Average.
Conclusion:
Switching to Renko wasn’t just about a different chart type; it was about a different mindset. I stopped trying to predict the future and started reacting to the present. If you find yourself overwhelmed by the complexity of modern Forex trading, I highly recommend spending a week with Renko. It might just turn the “chaos” of the markets into a staircase you can actually climb.
FAQs:
1. Are Renko charts better than candlesticks?
They aren’t “better,” but they are superior for filtering noise and identifying clear price trends.
2. Can I use Renko charts on MetaTrader 4?
Yes, but you usually need a “Renko Chart Builder” EA or indicator, as it isn’t a native default view.
3. What is the best brick size for Forex?
It varies by pair, but 10–20 pips is the “sweet spot” for most major pairs like EUR/USD or GBP/USD.
4. Do Renko charts repaint?
Standard Renko bricks do not repaint once the price has closed the brick, but some “Live Renko” indicators might, always check your tools.
5. Can I use Renko for scalping?
Absolutely; many scalpers use 2-pip or 5-pip bricks to catch fast momentum shifts without the distraction of time.
6. Does Renko work with news trading?
It’s risky because news causes huge “price leaps,” which can result in multiple bricks forming instantly, often far past your intended entry.