A band is placed around price action showing the upper and lower bounds of what would be the current renko brick. The band only goes up/down when the price action itself moves up/down by the amount you specify. There are several ways of specifying the amount:
Fixed Price Amount: As the name says, you enter the brick size amount, i.e. the amount the price has to move before being in a new brick.
% of Price: This method will calculate the amount the price has to move as a percentage of the price itself. This way as price goes up/down, your brick size will adjust accordingly. Recommended values would be around 1% or less.
% of ATR: This option will make the brick size a percentage of the . You can specify the ATR time frame to be different from your current time frame as well as the ATR length. For instance you could be on a 10 minute chart but specify the ATR to be daily with a length of 3 and a percentage amount of 15. This would make your brick size 15% of the for the last 3 days. Recommended values are 10 to 20%.
Use this indicator on any time frame, even the 1 minute as the renko bands span the price action the same way on any time frame easily letting you know whether or not the price has moved appreciably, regardless of how much time has passed.
You can also set alerts easily, simply set the alert to crossing and choose “Renko Candlesticks” instead of “Value”. You will then see the options for the renko upper and lower bounds.
Tested on Bitcoin with the following values:
Fixed Price Amount: 30 ($30)
% of Price: 0.45 (if Bitcoin is $7000 then the brick size would be $31.50)
% of ATR: 15%, ATR Time Frame: 1D, ATR Length: 3 (3 days)
Question though. I can't seem to get the %ATR option working correctly. No matter the number I put in, there is ultimately no change to it. The only change I can get from it is changing the source. Is there a specific way you have to in put the percentage. I've tried 75, .75, .075 etc. etc. I prefer this method, but the other (fixed price amount) works fine. Unfortunately, I have to change it for each pair I trade. do to different levels of volatility. Any help would be greatly appreciated.
In terms of a strategy, you would basically look at a normal renko chart and then try to port a strategy from that over to this. For an idea, look for up brick followed by down brick and call that a high then down brick followed by up brick a low. That creates a range. When price breaks above the previous high go long, and short if it breaks through the previous low. Then you can go from there to add more logic to try to avoid getting chopped
i have some questions, purely for my own understanding. up till now what i have read about renko charts, mostly draw it using close price. but in your script there are other options like hl, hlc, and ohlc. can you please point me to some literature or resource that how to consider highs and lows of normal candlesticks in renko charts together with closing price, instead of only closing price.
thank you once again