Simple Profitable Renko Method

Discussion in 'Strategy Development' started by osho67, Sep 9, 2009.

  1. I use FTSE100(Z) futures. Each point is £10. I set up the renko charts with a box size of 5.

    After open whenever a green bar forms I will take a buy trade. Sometimes I set this up in advance in the anticipation. Immediately my trade is filled, I set up a limit order for 5 pts profit and a stop loss at 10 pts. Most of the time after first green bar ,second one will form (momentum) and I will get a profit of 5 pts. (£50).

    Now I will wait for the market to reverse. When a red bar forms I will take a sell trade ,again profit target is 5 pts and stop loss is 10 pts. I have observed that with Z stop loss at 5 points gets filled frequently due to noise. Even though risk/reward ratio is 2:1 , number of my 5 pt wins are far more than my 10 pt losses and most of the days I end the day with net profit.

    I would like to improve on my system. When ever there are big trends up or down, I miss that as my profit target is only 5 pts.

    Many times a reversal is a pull back (I donot know this in advance) so I will still take the trade and lose 10 pts. But in spite of this no of 5 pt wins are more and I end as a profitable day.

    You can observe renko chart for any product and you will see what I have said is correct.

    Plese help me to improve on my system. I am experimenting with trailing stop loss so as not to miss big trends. All critisims , comments and observations much welcome with gratitude. Thanks

  2. Thanks for your feedback. What you say is my fear as well. I would like to improve on this aspect. If I have 10 as profit and 10 as loss, most of the time profit target is not met. I have not tried 7.5 on both sides. But over last six months I have been profitable 80-90 % of days.

    I have observed market conditions change as well and something which is working now may not work in the future. Advantage of renko chart is market turns are very clear.
  3. 119 views- not much interest.

    either people donot like renko charts or there are so called lots of profitable systems.
  4. slacker


    Post a chart with today's trades!

    Thank you
  5. couple of things.

    Most here do not know how Renko charts work....If you want to generate interest (if thats your goal) you may want to offer some basis so people can appreciate the benefit of using those charts

    Secondly, you may or may not know that the primary strength of your setup rests in the size of the bar. Especially if you trade the ES contract (the only market I have any expertise in). In that market the odds of continuation on a move scale up significantly after 5 ticks...below that however the odds of continuation are about 50/ see what I mean....?

    Finally your best bet in terms of generating responses is to educate people using chart examples....if you can do that you may see an uptick in views and some intelligent replies

    Good luck
  6. Thanks slacker and stevesbg,

    I donot know how to post a chart from QT to this forum. But I will try to learn from a friend.

    Plese look at todays ES chart box size 2, After a green bar formed the second one was there. This has happened twice. After the second green bar the run upwards was very nice.

    I will try to post some chart. If it is easy plese pm me. Thanks for the interest
  7. Eight


    Using this Kelly bet size simulator I can see that with loss /win of 2 requires only about a 70% win rate to be better than random... that is not counting trading costs..

    Are you always getting long first? Or are you saying that you wait for the first green reversal bar or the first red reversal bar?
  8. I will go long at the first green bar.Just take a profit of 5 pts which mostly is all the time because it is a small target. Then i will wait till chart makes first red bar and will go short. Target only 5 points. Not many times there will be a loss of ten points. But most of the days I have a net positive days.

    There is some discretion involved as well. I try to judge that market is very slow and even to achieve 5 points takes more than 30-40 minutes. I will not take the next trade. By watching chart everyday for nearly 7-8 hours I am trying to develop some feel as well so I can take high probability trades.

    Thanks for chart. I will try to study that as well. Transation cost with IB is very low.

    Thanks for your input. I am trying to read more about renko charts but there is not much literature about this. Renco charting is very clean and reading price action is easy-i think
  9. I admit my system is currently not working.The reason is market is very sluggish and momentum is hardly there.

    I am experimenting on the following idea: Buy or sell as per original system. Put a stop at 10 points and no particular profit target. After market has gone up 5 points (for a buy trade) cacel the stop order and instead put a traing stop for 5 points.

    This allows me to ride the market if there is a surge. Or I will get stopped out at 5 point loss (or maybe slighly less as it is a trailing stop.

    Comments much appreciated.
  10. xtf


    renko usdjpy with 30 pip blocks- first up block at 90.24. The market without time. A nice simplification.
    #10     Sep 21, 2009