Risk of disappointment in Renko Bricks
Regarding your strategy topic, I want to add the following warnings. As you might have mentioned, Renko bricks could be very special. Traders suffer disappointments by trading this, even though the strategy was working technical perfectly. Here are my comments
• Renko Bricks are never painted while they are developing after time contrary to the time based periods. A new Renko brick appears only after the price went further than one brick height. So when you see a new brick, the time and price could be already somewhere else. In other words: You are always 1 brick behind or you always lose 1 brick in any setup calculation. The lag could be even more in fast markets.
• A source for misunderstanding is the different bid / ask calculation. For long setups a trader (and also a strategy) should take ask priced charts while for short setups he should consider bid priced charts. Especially with Renko bricks you might see a significant difference in the chart pictures. Example of a bad situation: you watch a bid chart and you wonder why your long entry level is delayed more than 1 brick or far out of the displayed brick price. It is better to create 2 equal strategies. One for long (taking an ask priced chart) setup and one for short (taking a bid priced chart). If you want to analyse a long entry you switch to the ask applied price chart, otherwise you take the bid.
• Another reason for strange behaviour could be price jumps. They could be painted just as normal Renkos bricks into the Renko chart. This might pretend then as a smooth price movement while there was almost no quote (maybe only one tick within a brick). It might look nice in the chart, like a long trend ladder, but you cannot trade this because of price gaps in too short time. If this happens, many Renko bricks get painted, but they could never be traded. There are many price jumps especially during news. A trader should not be fooled by this. Given example of this situation: price jumps during news. If this happens many Renko bricks are painted, but they could never be traded. Right entries and exits get impossible.
• While back testing you think you own a great strategy. But consider that Dukascopy uses an approximation algorithm for price based charts. So your result could look better than it might be ever been traded in reality. Please see the following link.
viewtopic.php?f=16&t=50499 . The real price never went like pretended in this Renko chart.
• Here is my price bars bug report link list. They were mostly about Renko bricks and other price based charts
viewtopic.php?f=65&t=47848&p=66154&hilit=renko&_dc=985&sid=ee421caff5041800cd05a035f3c12702#p66154 viewtopic.php?f=88&t=46717&p=62217&hilit=renko#p62217 viewtopic.php?f=88&t=47108&p=63504&hilit=range+bars+history#p63504 viewtopic.php?f=65&t=47024&p=63193#p63193 viewtopic.php?f=85&t=50601 viewtopic.php?f=65&t=50984 https://www.dukascopy.com/swiss/english ... 85&t=50462 Please review your setup.
If you are still convinced by your idea, I need a confirmed setup specification in order to quote you a price for the implementation.
Please send me your setup description to
[email protected]
My strategy is currently based on a time setting of 1 minute which is not brilliant...how can I change this to renko
