Renko indicator is different from other price charts because it focuses only on price and ignores time. Additionally, it shows only price movements of a specified magnitude and ignores prices lower than the prespecified level. As a result, it presents a clear visual representation of significant price changes and disregards noise.
With normal price charts, a new bar is generated as time passes. On the other hand, Renko indicator displays a new bar only if the price movement matches your prespecified amount. For example, if you’re looking to trade the EUR/USD pair and you’ve set up the indicator to display only price changes from 15 pips and higher, you will not see any price movements lower than that number.
Importing the Admiral Renko Indicator Into MT4
Unfortunately, the Metatrader 4 and Metatrader 5 standard packages don’t include the Renko indicator. However, there is a way to bring the Renko indicator into MT4 and MT5 by downloading a package of custom indicators.
The MetaTrader Supreme Edition Plugin created by industry professionals that includes a number of custom indicators, including the Admiral Renko indicator.
Once you’ve installed the MTSE plugin, double click on Admiral Renko to launch the custom indicator. One of the major advantages of Admiral Renko is that you can customize it according to your preferences.
In the chart above, you can see how Admiral Renko displays the price action in a clear and simpler manner. Other Renko indicators don’t let you plot the blocks directly onto the chart. Fortunately, Admiral Renko allows you to do this, allowing easier comparison. Also, with this indicator, you can plot Renko candles as an individual chart, providing you with the classic Renko look.
Trading Forex with Renko Indicator
At its core, Renko charts provide you with a much clearer visual representation of the current market state. So for instance, if you notice a set of successive down-blocks, it’s easy to understand that the market is in a downtrend. With Renko charts, each block is a directional signal – an up-block is a buy signal while a down-block represents a sell signal.
However, Renko charts can also be used in a more advanced manner. The image below displays the 19-minute Renko chart for EUR/USD pair, including a 10-period moving average. The added MA follows the Renko values, or the previous 10 Renko blocks, rather than the 10 previous 19-minute periods.
In this case, the trader can use the moving average in conjunction with the Renko blocks to identify buy or sell signals. Therefore, if the Renko blocks break below the MA, it indicates a sell signal. On the other hand, if it breaks above the MA, it represents a buy signal.
In conclusion, Renko is a versatile Japanese chart that displays only the price movements of the prespecified magnitude and ignores the time component. While its most basic use is to clearly see the current market state and its movements, it also has many other applications.
If you want to learn about Renko in more detail and you haven’t used it before, start out on a demo trading account where you can explore Renko’s applications without risking real money.
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