A Renko Strategy for Trading - Part 6
This is intended more as educational material on a strategy for using renko charts. To begin with, I'll be using USOil in the examples but will include other markets as I continue through the series. The material is not intended to prescribe or recommend actual trades as the decision to place trades is the responsibility of each individual who trades as they assume all risks for their own positions and accounts.
Chart setup:
(Part 1)
Double Exponential Moving Average (DEMA) 12 black line
Double Exponential Moving Average (DEMA) 20 red line
Parabolic SAR (PSAR) 0.09/0.09/.23 blue circles
Simple Moving Average (SA) 20 blue line
(Part 2)
Stochastics 5, 3, 3 with boundaries 80/20 dark blue/light blue
Stochastics 50, 3, 3 with boundaries 55/45 red
Overlay these two on one indicator. Refer to 'Part 2' as to how to do this
(Part 3)
True Strength Indicator (TSI) 14/4/4 dark blue/ red
Directional Movement Indicator DMI 14/14 ADX-dark green, +DI-dark blue, -DI-red
Part 6
Only use 2 block sizes SxS to trade with. One for placing orders and one to confirm plan
Previously I had many different block size charts of the same instrument but I think that causes more confusion the benefit
Set interval to 1 minute for all charts and block sizes
Potential block sizes to consider or experiment with:
Crude Oil: .10/.20
Currencies: .0005/.0010
BTCUSD: 10/20
SPX500: 2.5/5.0
Ags: .005/.010
I use BTCUSD for training purposes along with the TV paper trading capabilities.
Recap:
Basic analogy is that of an unconscious patient brought into an emergency department and a triage is performed to determine a plan of treatment. In this scenario, price is the patient, the indicators are probes and tests against the patient, and you're the ED physician performing the triage with the treatment plan the trading plan.
This is a reactive type of trading plan. Based on observation of price, volume and indicators, a reactive order is placed with a somewhat tight stop
Depending on trading style or success rate the exit strategy could be either a target method or trailing stop strategy
There are guidelines for adding positions or re-entry based on choice in previous step
Basic Strategy:
Buying
(basic)
12/20 DEMA where 12 crosses up over the 20 and + 1 block
(filters)
PSAR and price have swapped where price is greater than PSAR
Stoch (short term - blue) is or has recently crossed from near 0 up over 20
Stoch (long term - red) is or has recently crossed from near 0 up over 20
TSI (blue) has crossed up over the signal line (red)
DMI +DI moving up with -DI dropping. Ideally +DI crossed up over -DI at or soon after DEMA cross
Chart setup:
(Part 1)
Double Exponential Moving Average (DEMA) 12 black line
Double Exponential Moving Average (DEMA) 20 red line
Parabolic SAR (PSAR) 0.09/0.09/.23 blue circles
Simple Moving Average (SA) 20 blue line
(Part 2)
Stochastics 5, 3, 3 with boundaries 80/20 dark blue/light blue
Stochastics 50, 3, 3 with boundaries 55/45 red
Overlay these two on one indicator. Refer to 'Part 2' as to how to do this
(Part 3)
True Strength Indicator (TSI) 14/4/4 dark blue/ red
Directional Movement Indicator DMI 14/14 ADX-dark green, +DI-dark blue, -DI-red
Part 6
Only use 2 block sizes SxS to trade with. One for placing orders and one to confirm plan
Previously I had many different block size charts of the same instrument but I think that causes more confusion the benefit
Set interval to 1 minute for all charts and block sizes
Potential block sizes to consider or experiment with:
Crude Oil: .10/.20
Currencies: .0005/.0010
BTCUSD: 10/20
SPX500: 2.5/5.0
Ags: .005/.010
I use BTCUSD for training purposes along with the TV paper trading capabilities.
Recap:
Basic analogy is that of an unconscious patient brought into an emergency department and a triage is performed to determine a plan of treatment. In this scenario, price is the patient, the indicators are probes and tests against the patient, and you're the ED physician performing the triage with the treatment plan the trading plan.
This is a reactive type of trading plan. Based on observation of price, volume and indicators, a reactive order is placed with a somewhat tight stop
Depending on trading style or success rate the exit strategy could be either a target method or trailing stop strategy
There are guidelines for adding positions or re-entry based on choice in previous step
Basic Strategy:
Buying
(basic)
12/20 DEMA where 12 crosses up over the 20 and + 1 block
(filters)
PSAR and price have swapped where price is greater than PSAR
Stoch (short term - blue) is or has recently crossed from near 0 up over 20
Stoch (long term - red) is or has recently crossed from near 0 up over 20
TSI (blue) has crossed up over the signal line (red)
DMI +DI moving up with -DI dropping. Ideally +DI crossed up over -DI at or soon after DEMA cross
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