Trend is your friend but not at it’s end. This is the famous saying hat you will keep on hearing again and again as long as you are a trader. Spotting a trend at the right time and riding it till it’s end before it reverses itself can be highly profitable. Always remember, it is only with trend trading that fortunes are made.
Now, the largest challenge that a forex trader faces in trend trading is to know in advance when the sentiment has changed and turned against the trader. This is an indication to get out of the trend as soon as possible. Spotting a trend in it’s early stages can be done with the help of technical indicators. But the most difficult thing for a trader is to know when the trend is going to reverse itself.
Trend changes are often sudden and abrupt for most traders. This sudden and abrupt reversal in the trend can simply turn your unrealized profits into a huge loss. So, in trend trading knowing in advance when the trend is going to reverse itself is of essence. If you can somehow master a technique or a method that can tell you in advance when the trend is about to change, you are on your way to become a winning trend trader.
Renko Charts are considered to be the best in telling you when the sentiment in the trend has turned against you. Renko means a brick in Japanese and is a way to smooth out noise from the price action in the market.
A Renko is a predefined move in the market unlike the candlestick and bar charts that depend on the high, low, open and close of the day. A Renko Chart will only provide a additional brick on the chart if the price has moved a predetermined level.
So, as a trader if you are interested in knowing the persistence in the market sentiment, watching consecutive renko blocks will confirm that the market sentiment is being pushed further brick by brick. Combining Renk Charts with other indicators can give you highly precise and accurate trading signals.
Now, when setting up a Renko Chart, the trader can use any time interval and any renko block setting that suits his or her trading goals. However, the settings are usually set at the smallest possible level something like 1 pip so that the information that is generated is at the smallest possible level. This ensures that the trader is able to detect micro patterns in the trend that are otherwise very difficult to detect with other charts.
On a Renko Chart, the ability to see a series of new up blocks or new down blocks is a confirmation that the micro trend is going strong. Now, Renko charts can be used in various setups and strategies. Renko Charts are used to map the price action along the support and resistance and finding the trend lines. This gives the trader the foundation of shaping a trend.
The benefit of using the Renko Charts lies in the fact that it gives you the ability to see whether the sentiment is changing on the larger timeframes or on the smallest timeframes. Renko Charts is a tool worth exploring that can helpm you become a better and a successful trend trader. You should to master Renko Charts!