4 Effective Ways to Utilise Renko Bar in your Trading Experience

A commonly associated term with trading is the Renko bar. This indicator tool has often satiated the needs of many professional traders by its clear presentation of the figures. This bar is designed to focus less on the minute price movements so that the large trends can be followed attentively. Only when the price movements on a certain stock have the potential to cause a difference for the user are the blocks attributed with specific values on the charts created accordingly. Here, we will help you through how this tool can help you uplift your trading style.

The 4 Ways to Use Renko Bar

The Renko bar has a few characteristic features that help in trading. This chart has components like bricks, wick, etc. that fulfil different roles when used during trading. Read along to find out more.

• Setting the brick valuation

The most important way to implement this bar is by carefully setting the value of the bricks. The bricks will further showcase the momentum of the market. It is often advised that the brick valuation should range at least 30 points for appreciable results. If the values are around 5-10 points, then the charts will highlight every minute of price movements, thus discarding the actual objective of the chart. Hence, evaluating your bricks wisely is very important.

• Highlighting the range

A misconception about trading is that they always move in trends. But in reality, trends comprise only 30% of the time. The remaining 70% works on a range between different supportive and resistance prices for a certain period. Traders can use Renko to highlight these kinds of ranges. Your bar bricks will draw a line according to the market movements, thus forming ranges. The user can use these ranges to plan their strategies accordingly.

• Spotting potential breakouts

ATR is a volatile measure often used in breakout trading strategies. ATR is also the measuring unit of the brick points; hence, Renko bars can easily be used for breakout strategies. Though this is quite similar to the range trading strategy, implementation is different. Unlike the previous one, the chart can function naturally in showcasing the time of the potential breakout points.

• Identifying the reversals

Another feature added to the bar is the wick, which indicates the market reversals. Keeping track of market reversals is very important to forming effective strategies. Market reversals give you a sneak peek of future market movements. This information will help you make decisions that maximise your profits and minimise your losses.

Final Thoughts

Renko bar has negligible drawbacks if compared to the benefits it provides to its users. Traders have been profitable by using this indicator tool. This bar is highly recommended for new traders or those deciding on such an investment.