So this is a 10 pip Median Renko chart, what’s curious is that the colored part of the candles is actually 15 pips. If you look at the first candle to the left of the 1.4240 label, you’ll see that the green candle’s bottom is at 1.4240, it’s top is at 1.4255 and the open of the new bar is at 1.4250. If an up-candle first goes down 7 pips before closing as an up-candle, then you will see a 7 pip wick coming out the bottom.

This helps to make the bars very smooth and eliminates some of the problem with regular renko bars. On regular renko (example 10 pip renko bars), the price can has to go 20 pips down before you see a new bar to the downside. I have been experimenting with renko for a long time now and the problem I have found is that the risk to reward ratio becomes “unpleasant” having to account for the pips to the opposite direction.

I prefer to trade using a combination of time bars and range bars (see next pic), however I’m testing the median renko bars for an ea that I’m working on.

PS. I came across the Median Renko script for Ninjatrader at Big Mike’s Forum (my favorite FX forum).

In the 3 years that I’ve been trading forex and learning to trade, there’s been a lot of lessons – each with varying degrees of usefulness. One of the things that has really helped which I heard quite a few times before I implemented it, is to focus on trading just one pair at a time. As newer traders we’re wanting to trade our way to financial freedom and there’s this impulse to trade multiple pairs so that there are more opportunities. The challenge with this approach is that unless our trading system is truly a dynamite butt-kicker which works in all market conditions, the level of quality setups drops.

Click on this link to see my multi time frame and renko charts. This is all for the Euro, from the top left is the 3 minute, 15 minute, 1 hour, 10 pip renko, from the bottom left is 20 pip renko, 4 hour and daily. (I took this screenshot on my laptop so it’s cut off at the bottom).

This gives me a great overview of what’s happening with the Euro which I like to trade because the spreads are super low (0.9 with Oanda) which is great for scalping , it has a great daily range (lots of movement each day) and I can also watch the dollar index for additional info.

We are bombarded with so much information that it is overwhelming and it is confusing at first to do multi-time frame analysis because the signals seem contradictory.

As you focus and watch from this perspective more and more you will get used to the rhythms of the market. If you’ve been fortunate enough to gain some experience slugging it out and taking your losses, you’ll start to get a feel for the personality of the pair.

There’s a great saying “scared money never wins”, the markets kick our butts because of greed and fear.

Everyone wants to sell tops or buy bottoms and make tons of pips but remember picking bottoms makes for stinky fingers. So many traders were short on the Euro last week and it’s just kept going up and up and up. If you were watching all these charts at once and trading what you see, it’s pretty hard to get not see that the market is going up.

One of the things that hurt me the most before with trading is that I would make trades with big stop losses risking say 3 or 4% of my account, but then as the market moved I would move my stop thinking it couldn’t go up anymore and then it would just keep going up and up and I would take a big loss. I don’t imagine I’m the only guy out there who’s done that. Making sure that I never do that again has been very helpful in keeping my account from suffering any big losses.

There’s a cool free ebook by Rob Booker available on the net called Strategy 10, it’s about learning how to consistently bag 10 pips a day. That’s pretty easy to do and it can make you tons of money if you scale up properly. It’s a lot harder to bag 50 pips a day, somedays we do but other days we lose. I think that we can easily get 10 – 20 pips per day if we don’t get too greedy and quit when we’re ahead.

First of all there’s less fake outs, price has to move x pips before a new bar is created. (Obviously if you’re using 5 pip bricks you’ll have more fake outs then 20 pip bricks.)

One of the biggest advantages if you’re trading manually is that it’s really easy to see patterns and also whether the market is trending or ranging. I think it’s much easier then with time based charts.

For automated trading it’s the price that determines whether your signal candle criteria is met, not time. Which is much better because it’s the price that matters most not the time.

If you’ve been following my post on the fx genius, I’ve finished my testing and shelfed it with the “not worth my time” category. The only broker I know that has really fast execution without requotes (except during news) is Oanda and of course they don’t have mt4. They also charge a monthly fee for their api.

This is where magic happens!  I’m loving trading manually lately, staying up all night playing tunes and making nice gains, gotta love it. After 2 years of tough work to get here, now it’s gravy time!

Update on Ultimate – 2 weeks ago it made close to 300 pips, last week it made 250 pips and then lost all 250,  Ouch. I realize that I need another filter so that it just trades with the “general trend” which for me is above/below the 77 ema. Why 77?  I like it and it works =)  I’ve got to do some more testing before I send it to my programmer for the upgrade but after 8 hours of visual renko backtesting yesterday, I just wanna trade…

This is not for auto-testing (if you figure that out please let me know =), it’s for visual backtesting and gives you the ability to be able to “play”and “pause” the charts, and “fast-forward” which I am using to create winning strategies. I have my entry/exit criteria and then keep records of the wins and losses in excel. Note: To do this you should have already added more renko bars.

1. First of all download this trading simulator shared at ForexFactory by Ronald Raygun. Follow the instructions to manually install to your mt4 or use the auto-installer
2. Go into your metatrader to  c:\program files\metatrader 4\history\ and create a new folder called: renko.
3. In the same folder go into where it says Demo and copy the following files:

   >symbols.raw
   >symbols.sel
   >symgroups.raw
   >ticks.raw
   >all 1 min data, e.g. EURUSD1.hst, GBPUSD1.hst, USDCHF1.hst, etc.
4. Paste the files into your newly created renko folder
5. Open Mt4 and click on Login, use the same user/password but in the server field put: renko and login (no connection)
6. Restart metatrader  (when it opens don’t touch the login button)
7. Put renko script on all or any 1 minute chart, choose the bar size you want and then for timeframe put 5
8. Click View > Strategy Tester
9. Where it says expert advisor choose: LFH Strategy Tester 3
10. For Symbol, choose the currency pair you want (that you put the renko script on)

    Model (every tick)
    Use date – unchecked
    Visual Mode – checked
    Period 5m
    Optimization – unchecked
11. Now click start to open the chart!  (if it says waiting for more then a few seconds, just restart mt4)
12. Right-click to apply a template

Remember that due to the nature of renko bars, price can go almost 2 bars against you with no record. Example – if you short after a down-bar (say 20 pip renko bar) then price can go above where you entered up to 39 pips without creating a new bar.

PS. Credits to “Aktur” at ForexFactory for sharing the original tutorial about how to do backtesting with renko.

1. Download a fresh mt4 – ex: fxcm uk mt4
2. Change chart to 1m and zoom in
3. Turn off autoscroll
4. Go to Tools > Options > Charts – put max bars in chart 512000
5. Put a small rock on your home button and go have a coffee (wait 5-10 min)
6. Add renko script (choose your bar size and put bars 512000)

I just did this with fxcm uk and I’m getting 937  Renko 15 pip bars

If you haven’t heard of renko bars: how it works is instead of a new bar being formed every 5 minutes or hour, you can set the amount of pips movement which will yield a new bar. So if you set it to 10 for example, turn on your renko chart  and the last bar has been an up-bar – now price will form a new up-bar only when price moves up 10 pips. If an hour goes by and price doesn’t move more then a few pips there will be no new renko bars created. In order for price to create a renko down-bar, price has to move 20 pips down.