TradeStation Help

Renko Chart

Renko charts are similar to a Line Break chart, except that in a Renko chart each brick is of a fixed equal size. In a Renko chart, a new brick can only be added in the direction of the current trend if the market has moved in that direction by at least a specified minimum amount, the Brick Size. A new brick can only be added in the direction opposite current trend if the market moves opposite the current trend by that same minimum amount, the Brick Size, beyond the most recent brick.

Bricks are color-coded to indicate the trend. For example, a series of green bricks may indicate an up-trend. A series of red bricks may represent a down-trend. Alternating green and red bricks indicate a period of indecision in the market.

In this example, the Renko chart is using a Brick Size of 1:

How a Renko Chart is Built

• When the market moves in the same direction of the prior Renko brick, by the specified Brick Size, a new brick will be added in the same direction as the prior brick.
• When the market moves in the opposite direction of the prior brick, by the specified Brick Size, a new Renko brick will be added in the opposite direction of the prior brick.  
• If there is no significant change in price, i.e. the price oscillates within the range of the last brick, no new bricks will be added.

Renko Interval Settings

The Brick Size is the minimum price movement needed for a new brick to be drawn. The Brick Size must be greater than the minimum move, and should be evenly divisible by the minimum move or rounding errors may occur.  

Renko charts have a fixed interval setting of 1 Tick. As a result, loading longer range Renko charts may take some time. Since Renko charts are drawn using one tick, they are limited to a 6 month time frame.  

Trading Interpretation

• Trend reversals are signaled by the emergence of a different color brick
• A rally is indicated by a series of green (default), upward bricks
• A decline is indicated by a series of red (default), downward bricks
• A stable market is indicated by alternating green/red (upward/downward) bricks

Strategy Back-testing & Automation

Strategies can be effectively back-tested and automated on Renko charts, only when the applied strategy uses "on Close" orders (ex. Buy this bar on Close). For additional information on back-testing and automating strategies on Advanced Chart Types, see Advanced Chart Types - Strategy Back-Testing & Automation.

Additional Information

• When using a Renko chart, multi-data charts can not be created; only one symbol can be displayed on a Chart Analysis window at a time.
• Renko charts are not time-based; they are built based on price activity. Thus,
  • The lines on the chart will not necessarily represent the specified data interval or time period.
  • Dates may not necessarily be evenly spaced across the time axis (x-axis).
• Indicators and strategies can be applied to a Renko chart.
• Actual volume values are displayed for each Renko Brick.

For a comprehensive list of command line commands, see Command Line References (All Commands) or Command Line Reference (Sorted by Application).