Renko Charts Explained — Full Breakdown & Transcript

[00:02] And I am Ricardo. Hey Lois, let me graph and started thinking, "My God, that looks like an electrocardiogram of someone who drank five cups of coffee?" [music]

[00:17] a minute is like a small boat in a rough sea. Every move is madness. show you a graph that is underestimated, which is the Renko chart. Not many majority use candlestick charts, but we're going to show you

[00:32] how easy and clean this visualization is, making And Ren refers to those bricks; the name itself is Ereno, which means brick in Japanese. But hold on, before you all freak out and start

[00:45] replacing all your life's charts with Rento, we're going to show you what it is, how to configure it, and most importantly, where it can fail if you don't know how to use it. Yes, these bricks can build a wall and break

[00:58] your face if you're not careful and if you don't click here to like our video. Sign up here to always have access to content related to trading. to always have access to content related to trading. And now for the video.

[01:18] a candle every minute, every 5 minutes, every 10 minutes, depending on the time you choose, the Renco chart completely ignores time, meaning it can show 1 hour or even 5 minutes. What really matters is the

[01:32] price, how much the price has moved. With that price movement, that's when a new brick will form. Renco only moves, meaning it only moves, by a pre-defined minimum quantity. what we call

[01:46] brick size. So imagine if the market remains sideways, without any clear direction. Go up a little here, go down go down here. Well, in

[01:59] traditional candlestick charts, this is crazy and you 'll see a mess of wicks that will definitely confuse you. No renco. Nothing will happen. The chart literally won't move because there hasn't been enough movement in the

[02:14] predefined price for a new brick to appear, okay? So, what is the practical advantage of this? In reality, it greatly simplifies the visual interpretation of the graph there. You 'll see trends, support, and resistance in a much clearer way

[02:29] , without noise interfering, much cleaner. That price fluctuation, without a defined direction, almost disappears; it simply doesn't appear on the And there's another interesting point: each brick represents a fixed

[02:44] price movement. It becomes easier to visually identify where the price has stabilized in that several bricks piled up in a price range, which usually indicates a strong support or resistance zone. This is very helpful for those who have difficulty

[02:58] sticking to a trading plan, because with less visual noise you tend to instead of exiting at the first sign of price fluctuation, right? And that brings us into a psychological aspect that we'll discuss in more detail

[03:11] So, how do you determine the size of the brick? Because this choice truly changes everything. Yes, there are actually two ways. The first is the fixed value. You will define there, for example, that each brick

[03:25] represents 10 points, 20 points in the mini- index, or 5 cents in a stock. Small bricks are the way to go, so they remain more sensitive, they pick up smaller movements, which is great for those who are scalping, but it also

[03:37] which is what we're trying to avoid, right? Moreover, a larger brick, more stable, filters more effectively, is more suitable for more effectively, is more suitable for swing trading or for those who have less

[03:52] screen time and want to trade more calmly, without reacting to small movements or every breath of the market. The second way, which we think is even smarter, is to use the ATR. It's an

[04:04] indicator, right, that represents the true average range, used to calculate the size of the dynamic brick, based on the asset's actual volatility. Using ATR prevents you from applying the same generic brick to completely

[04:20] different assets. The time has come for the care we promised at the beginning. Rencro filters time. This means it doesn't show how long it remained stationary inside the same brick, right? In other words, the price could have remained

[04:33] within a certain range for 3 hours without generating any new bricks. And then suddenly you look at the graph and think, "Well, nothing happened." When in reality, the market was testing you the entire time. And this is dangerous for those who use ranking

[04:46] to decide on target and stop-loss orders based solely on brick count, ignoring market news. The second classic mistake is precisely switching to a different chart, thinking that it has solved the discipline problem. The truth is that a

[05:02] pretty chart doesn't replace a trading plan. Exactly. The renco, right? It reduces visual noise. But it doesn't reduce the risk. Anyone who enters without a defined stop loss, without knowing how much they're risking per trade, will

[05:16] prettier chart on the screen. It's like changing cars and thinking you drive better because of it. No, you'll just crash into a more And this is precisely where psychology comes in. Because Renko filters out

[05:31] noise, it can give you a false sense of control. It's good because it eliminates the tension and fear of constantly watching that tiny bit of price movement. But that's precisely the danger, because it can lead to overconfidence.

[05:46] Golden rule here on the channel. No type of chart relieves you of the responsibility of defining your risk before, during, and even after the trade The truth is that the rhinus helps you with reading, but it's you who executes the plan or

[06:00] breaks it. Go ahead and subscribe to our channel, like our video, and if you enjoyed this video, you'll definitely like this next video that YouTube is recommending! Until

[06:13] YouTube is recommending! Until next time.