Renko charts are a unique and useful tool for traders on the BetPro Exchange. Displaying price movement in uniform bricks rather than by time intervals, Renko charts can help traders identify trends, reversals, support and resistance levels, and more. In this in-depth guide, we’ll cover advanced Renko strategies for unlocking new profits on the BetPro Exchange.
Identifying Trends with Renko Charts
The most valuable aspect of Renko charts is their ability to clearly identify overall market trends. As the National Futures Association explains, “Each Renko brick represents the range of prices in multiples of the specified box size. A change in color signals a trend reversal.”
By stacking uniform bricks only in the direction of price movement, Renko charts provide an uncluttered visualization of market trends. Traders can easily identify:
Uptrends and Downtrends
- Uptrends – When bricks stack higher in green (or white)
- Downtrends – When bricks descend lower in red (or black)
Trend Reversals
Reversals occur when the brick color changes from red to green or vice versa. These signal a flipping of the market bias.
Trend Strength
The angle of ascent or descent indicates trend strength. Steeper angles signal strong momentum, while more horizontal bricks suggest weakening momentum.
Mastering the identification of trends and reversals is the foundation for applying advanced Renko strategies.
Confirming Reversals with Indicators
With their focus on price action, Renko charts can occasionally generate false reversal signals. Prudent traders pair indicators with Renko charts to confirm reversals. Useful indicators include:
Moving Averages
Overlaying moving averages like the 20 and 50-period SMAs on the Renko chart provides dynamic levels of support and resistance. Reversals tend to be strongest when accompanied by a moving average crossover.
RSI Divergence
The relative strength index (RSI) oscillates between overbought (>70) and oversold (<30) levels. Divergence between RSI and price can foreshadow reversals:
- Bullish divergence signals impending uptrends
- Bearish divergence signals impending downtrends
Adding RSI expands context beyond the price action shown in the Renko chart.
Using Renko Charts to Set Profit Targets
Renko charts lend themselves well to visually setting profit targets based on historical support and resistance levels. Their uncluttered, brick-based construction simplifies the process of identifying key price zones.
In an established uptrend or downtrend, traders can set a take profit order reasonably near the last swing point or value area. This allows runs to continue without prematurely exiting, while still banking steady gains.
When to Use Larger Box Sizes
The box size determines the sensitivity of Renko charts by dictating the minimum price movement to draw a new brick. The default setting is often fine, but advanced traders alter box size strategically.
Larger box sizes help smooth over market noise to better identify macro trends. Box sizes in the $1-2 range or higher apply to volatile assets like Bitcoin. Lower priced securities warrant smaller boxes sizes to still capture dynamic changes.
Adjust box size based on volatility, price level, and desired smoothness. Test various settings using historical data to optimize.
Going Beyond Long and Short Setups
While Renko charts excel at identifying textbook long and short trading opportunities, advanced traders can further capitalize by employing additional tactics including:
Scaling In/Out of Trades
Rather than entering or exiting full positions at once, scale trades by legging in as trends extend or legging out as momentum wanes. This flexible approach allows managing risk and reward.
Playing Reversals
Certain assets and markets tend to frequently reverse without establishing strong trends. Develop strategies to play counter-trend bounces by combining Renko bricks with oscillators.
Analyzing Failed Breakouts
False breakouts that don’t trigger follow-through aid in quantifying areas where market participants are actively rejecting certain price levels.
Renko charts serve as a launchpad for all kinds of advanced tactics – test creative ideas using historical data.
Optimizing Strategies for BetPro Exchange Trading Conditions
To maximize success with Renko charts on BetPro Exchange, optimize your trading approach for exchange-specific elements including:
- Account for spread and fees – Wider bid/ask spreads and trading fees make tight stops unfeasible. Give trades extra room to fluctuate.
- Understand order flow behavior – Exchanges feature more high-frequency algorithmic trading that causes rapid intra-candle volatility. Adapt strategies accordingly.
- Consider exchange liquidity dynamics – Assess typical daily and weekly liquidity profiles to avoid issues with slippage or filling orders.
Fine-tune settings over time based on actual exchange trading data. What works well for stocks won’t directly transfer to the crypto exchange environment.
Conclusion
Renko charts cut through noise providing traders with an intuitive feel for overall market trends. By mastering Renko chart analysis and combining strategic indicators, BetPro Exchange traders can confidently enter supported breakouts, ride extended trends, and protect capital when reversals occur.
Adjust box size, time frame, and indicators to best match trading style and asset volatility. While there is no magic recipe, practice applying these advanced Renko strategies to improve trading outcomes.