Renko v Heikin-Ashi

Nowler

Experienced member
1,528 229
Hey folks,

Stumbled upon Renko Brick charts today and it piqued my interest.
While looking into it, I found out that it's got similarities with Heikin-Ashi

I have heard of Heikin-Ashi before, but didn't know what it was.

My question is, which do you prefer?
And why?
 

timsk

Legendary member
7,605 2,379
. . . My question is, which do you prefer?
And why?
Hi Nowler,
IMO, the two aren't really comparable for the reason that Heikin-Ashi (HA) is time based just like a conventional candlestick whereas Renko ignores time altogether and is based purely on price action. The latter is better compared with other non-time based charting methods such as Point & Figure, Three Line Break, or my current favourite: Range Bars.

If time isn't a key feature of your trading strategy (it is for many traders), then I think you're well advised to cut it out of the picture completely and explore one of the alternatives. They provide a 'purer' view of the market and only contain what price has actually done without the man made construct of time being laid on top and muddying the waters. The one time (pun intended) that it has value is daily charts in markets that have a daily open and close - such as equities. Other than that, for most traders most of the time, its a largely a meaningless distraction.

Given my comments, you can probably guess which of the two charting methods I prefer - and why. I would add that because of the way HA is constructed, it is even further removed from what price has actually done than normal candlesticks and, although superficially pretty, are actually difficult to trade. As a way of filtering out market noise they have some value and could be used as an indicator of general trend - but that's about all. Needless to say, this is just my £0.02p worth and others may have ways of using them I've not considered and think they're the bees knees. Each to their own.
Tim.
 
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Nowler

Experienced member
1,528 229
Hi Nowler,
IMO, the two aren't really comparable for the reason that Heikin-Ashi (HA) is time based just like a conventional candlestick whereas Renko ignores time altogether and is based purely on price action. The latter is better compared with other non-time based charting methods such as Point & Figure, Three Line Break, or my current favourite: Range Bars.

If time isn't a key feature of your trading strategy (it is for many traders), then I think you're well advised to cut it out of the picture completely and explore one of the alternatives. They provide a 'purer' view of the market and only contain what price has actually done without the man made construct of time being laid on top and muddying the waters. The one time (pun intended) that it has value is daily charts in markets that have a daily open and close - such as equities. Other than that, for most traders most of the time, its a largely a meaningless distraction.

Given my comments, you can probably guess which of the two charting methods I prefer - and why. I would add that because of the way HA is constructed, it is even further removed from what price has actually done than normal candlesticks and, although superficially pretty, are actually difficult to trade. As a way of filtering out market noise they have some value and could be used as an indicator of general trend - but that's about all. Needless to say, this is just my £0.02p worth and others may have ways of using them I've not considered and think they're the bees knees. Each to their own.
Tim.

Hey mate,
Hope you and yours are doing well?
Sorry about the delay. I was hosting mates for the final day of the footie today.

Thanks for the reply... though I feel it has raised more questions than it's answered :unsure:

I definitely agree with you on the level of similarity between Renko and H-A.
Time is the crucial difference.

Both are almost as new to me as the other... though I have heard of H-A before... just never looked into it.
For some reason, I find myself wondering if time is a factor for me...
Is it?

I mean... nowadays, I pick an instrument that I think is going a particular direction in the mid to longer term.
Mins... hours... days mean little to me.
Do weeks?
I guess I would like trades to go to my levels right away or pretty quick, but the success of my trade is not time dependant.

Unless I was long Oil for example, which is in Contango and would have a cost to hold which I would not be willing to pay in a ranging or a very low moving environment.

At first, I was hit with the very same things most people are hit with when it comes to Renko charts.
My instinct was, holy crap... this is a real money maker.
But if it was, then everyone would be doing it.
In fact, if it was and everyone was doing it, then it would no longer work, lol

I can see some clear pros... it's nice and clear.
But then again, I can look at a candlstick chart with multiple ranging areas, and still clearly see the range.
So, yes... it's clearer.
But it doesn't show me something that I can't already see.

This is just my thinking so far though.
I am still eager to look more into it.
In fact, I would love to learn more about the presence of time Vs the absence of time in trading.
That's an interesting topic indeed!

I'm aware of Point & Figure charts, though when I think of that, I think of having to manually plot it,...
Does your chart provider have Point & Figure? Mine doesn't.

I actually think the same when I look at Renko too...
I appreciate the benefits that doing this manually would bring, but at the same time... fuck that!
I might... but I'd rather not have to :)

Three line break...
Is that something akin to the aligator or crocodile thingy I've seen?
Done with moving averages? Though isn't that 4 MA's...?

Knowing you (in the little way I could possibly know you via an online forum), I am all of a sudden interested in Range Bars.
Again, not really sure what it is.
The words make sense, but I will definitely have to run a search.
 

timsk

Legendary member
7,605 2,379
Mornin' Nowler,
. . .For some reason, I find myself wondering if time is a factor for me...
Is it?
It's a good question and one that most (all?) traders would do well to address. Five years or so go there was a highly contentious member called 'Forexmospherian' who made various claims about market activity and how it related to time. Here's his (in)famous thread: A Master Class in FX Intraday Trading by F & Co
Traders who adopt an opening range breakout strategy often use time to define the opening range.
Only you can decide whether or not time is an important factor for you.

. . .But if it was, then everyone would be doing it.
In fact, if it was and everyone was doing it, then it would no longer work, lol
There's no magic bullet, it's more a case of personal preference.

In fact, I would love to learn more about the presence of time Vs the absence of time in trading.
That's an interesting topic indeed!
Agreed - why not start a thread on it?

I'm aware of Point & Figure charts, though when I think of that, I think of having to manually plot it,...
Does your chart provider have Point & Figure? Mine doesn't.
Try TradingView - it's free.

Three line break...
Is that something akin to the aligator or crocodile thingy I've seen?
Done with moving averages? Though isn't that 4 MA's...?
You've lost me with the alligator thingy I'm afraid. A good resource for all things charting is StockCharts. They have very good articles on just about everything - although not Range bars as far as I can tell. Here's their page on Three Line Break charts.

Knowing you (in the little way I could possibly know you via an online forum), I am all of a sudden interested in Range Bars.
Again, not really sure what it is.
The words make sense, but I will definitely have to run a search.
Here's an article about Range Bars: What are range bars and why should you use them?
It's by a chap who produces a plug-in for MT4 as Range Bars aren't offered by the platform. TradingView offer them but the free charts are limited to just two ranges: 100 and 1,000 points. Lastly, below is a 1,000 range chart of the Dax.
Tim.

Dax_27_07_2020.png
 

Nowler

Experienced member
1,528 229
Mornin' Nowler,

It's a good question and one that most (all?) traders would do well to address. Five years or so go there was a highly contentious member called 'Forexmospherian' who made various claims about market activity and how it related to time. Here's his (in)famous thread: A Master Class in FX Intraday Trading by F & Co
Traders who adopt an opening range breakout strategy often use time to define the opening range.
Only you can decide whether or not time is an important factor for you.


There's no magic bullet, it's more a case of personal preference.


Agreed - why not start a thread on it?


Try TradingView - it's free.


You've lost me with the alligator thingy I'm afraid. A good resource for all things charting is StockCharts. They have very good articles on just about everything - although not Range bars as far as I can tell. Here's their page on Three Line Break charts.


Here's an article about Range Bars: What are range bars and why should you use them?
It's by a chap who produces a plug-in for MT4 as Range Bars aren't offered by the platform. TradingView offer them but the free charts are limited to just two ranges: 100 and 1,000 points. Lastly, below is a 1,000 range chart of the Dax.
Tim.

View attachment 284541

Sorry about the delay, been swamped in work.

Thanks very much for the links mate!
That TradingView is going to come in very useful!
StockCharts webside too!


This is the aligator "thingy" I was referring to: Alligator Indicator
After taking a quick look at the 3 line break, I can see these have nothing to do with each other.


Just took a look at that guys thread.
I very nearly had a stroke when I read "but this method requires a lot of focus and ideally having at least a 2 to 6 hr available to carry out a number of multi intraday trades every session. "
And when I saw his first picture/attachment.

I wont disregard it, but it's definitely not after work reading for me - I'll take a look Saturday :)
 
 
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