FxBay Renko

No matter the asset that you trade and the system used these are the two most important things to avoid.

Introduction
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The original FxBay STG Strategy has been downloaded a few thousand times and used successfully but there were a few issues that needed to be addressed. Mainly the HalfTrend TT indicator that sometimes repaints giving false signals or no signal at all. The original strategy calls for closing the trade when a false signal occurs and wait for the next valid signal. Please note that although the HalfTrend TT indicator repaints it is by far the best HalfTrend indicator to use in any strategy using a HalfTrend indicator because it gives early signals as compared to HalfTrend indicators that don't repaint but, because they need confirmation of the trend, trades are most often entered late resulting in many pips being lost and trades closed late resulting in more pips being lost. To alleviate the need to close a trade when a false signal occurs or confirm that the trade should be closed a new indicator has been introduced, the Heiken Ashi Smoothed Alert. Since there is no need for the alert and no need to show the full indicator only the last two MA periods are shown; colored red for a downtrend and white for an uptrend. The other issue is that many traders like to use wicks although this is not recommended because it caused havoc with the signals provided by the HalfTrend indicator. To solve this problem traditional candles are no longer used and have been replaced with SwingMan's Scalper Candles. The advantage of those candles is that it shows the direction of the trend so a bullish candle can show that the trend direction, although positive, could be about to change. Therefore, this negates the need to use wicks with Renko candles. The components of FxBay Renko are explained below.

STG Renko indicators
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Many EAs and indicators can be used to create Renko charts. You might say that it's a matter of choice. The reasons I use STG indicators are:

1. When using the STG Renko Chart indicator to create a new Renko chart you could also add an EA that can be used for many purposes one of which can be to create another different Renko chart or an EA for risk management.

2. The STG Renko Chart Remote indicator is quite useful since it can be used to change the brick size of the Renko chart by changing the value on the right of the indicator.

Please note that the STG Renko Chart indicator works best on a M1 source file although you could use another timeframe but I found that using a different timeframe doesn't work so well with some brokers. Also, if you use this indicator to make a Renko chart for CFDs you need to multiply the brick size desire by 10 as shown in the pictures below. The first picture shows that to create a Renko chart of 10 pips using the STG Renko Chart indicator you need to indicate 100 pips on the M1 source file. The second picture shows that the result is a Renko chart of 10 pips as shown on the STG Renko Chart Remote indicator.

Source Chart
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The source chart chosen by traders is important no matter what the Renko chart generator is. Both charts in this example were produced by the STG Renko Chart indicator. At first glance you might say that they are similar since, for June 3, the 4 arrow signals and the number of Renko bricks are the same although the last brick from the M5 source chart wasn't completed when trading ended for the day. If you look at the number of volume bars you will see, if you magnify the charts, that there are 41 bars on the Renko chart produced by the source M1 chart (First picture) and 14 on the Renko chart produced by the source M5 chart (Second picture). Although not important, you will notice that the time indicated on the bottom of both charts are different. Excluding the first and last Renko brick of the day you will see that the number of Renko bricks was 49 on June 3. Since there were 41 volume bars on the Renko chart produced by the M1 source chart 8 of them are missing while 35 are missing on the Renko chart produced by the M5 source chart. Since the charts look similar you might think that this isn't important but this isn't the case. This is because when there is a gap on the source chart due to missing volume data a Renko EA/indicator fills the gap with Renko bricks with no volume until it finds one with volume. This confuses traders, including me, when we see many Renko bricks seemingly appearing from nowhere. To avoid this problem as much as possible please always a M1 source file although you could choose another timeframe and the Renko chart would look exactly the same.

Valid and invalid signals
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In order to have a valid signal the FxBay MACD and the Half Trend TT arrow must coincide. This means that the FxBay MACD must be close to the zero line since the trade must be made only after the Renko brick has closed at which time the FxBay MACD is at or has crossed the zero line. The first picture shows a false signal since the arrow is on a Renko brick that has not yet closed and the FxBay MACD is positive and way too far from the zero line. The second picture shows that the arrow disappeared confirming that the arrow was a false signal. https://www.forexfactory.com/thread/...5#post13503785 shows false signal and after arrow disappeared with the 2 pictures. The third and fourth pictures also show false signals. To recapitulate a valid signal must meet two conditions:

1. There is an arrow and the next brick is the same color as the brick where the
signal was given.

2. The FxBay MACD line must be crossed in the right direction of the brick after
the signal.

Sometimes the next brick will not be the same color as the brick where the signal
occurred. In that case the signal is not valid. I had to roll back the WTI chart
to 30 March to find a false signal so it's quite rare. The first arrow in the
fifth picture is a valid signal the second arrow is a false signal.

I will explain later how to use the Heiken Ashi Smoothed Alert indicator to deal with false signals.

Missing signals
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False signals are easy to detect because you have an arrow signal but the FxBay MACD on the next brick doesn't correspond because the zero line of
the FxBay MACD has not been crossed. Missing signals are not easy to detect because there is no arrow, no alert message and no alert sound. The only way to detect a missing signal is to be looking at the chart when it happens and to see that if a signal had been there the signal would have been good since the FxBay MACD zero line has been crossed on the next brick validating the signal. Although this is rare it does happens. If a trader had detected the missing signal on the attached chart the trader would have earned 17 bricks opening the trade on the vertical line. The first and last arrow in the picture are valid signals while I put an empty arrow on the missing signal at the top of the picture.

Wicks vs no wicks
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The first chart shows Renko with wicks and the second chart without. Please note that the Half Trend TT indicator, like all Half Trend indicators, doesn't exactly work the same way without wicks as compared to with wicks. Comparing the two charts you will see that the signals on the charts with wicks is sometimes
late as compared to the signals without wicks. As you can see the first signal given with the chart with wicks is quite late. Although it's a matter of choice I prefer not to use wicks since we don't trade wicks but the body of the bricks and the chart is cleaner without wicks.

Heiken Ashi Smoothed Alert vs false signals
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The picture below shows how the Heiken Ashi Smoothed Alert can deal with false signal. As you can see the first arrow indicates a downtrend signal. Normally, on the second arrow, the downtrend trade would be closed and a new uptrend trade would be opened. However, because the market is flat, it might not be advisable to close the trade although it's a matter of choice. The third arrow clearly indicates a new downtrend trade but it's a false signal since the next candle is opposite to the candle with the arrow. However, the market is still flat. Please note that the FxBay MACD is barely negative when the signal arrow occurs. In this case, relying on the Heiken Ashi Smoothed Alert still indicating a downtrend it would be advisable to continue with the original downtrend trade indicated by the first arrow and the FxBay MACD. Although this worked perfectly in this case, it doesn't always work because the Heiken Ashi Smoothed Alert is normally late giving trading signals. This is why it's best to use the Heiken Ashi Smoothed Alert only to deal with false signals especially on a flat market.

smC4Scalper candles
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On the previous post I showed how the Heiken Ashi Smoothed Alert helps dealing with false signals especially on a flat market. However, this was while using normal Renko candles. Below is the picture of the same market but using smC4Scalper candles. As you can see, although the Heiken Ashi Smoothed Alert reacts almost exactly the same way, the HalfTrend TT and the FxBay MACD react differently. I like using smC4Scalper candles and they give good results most of the time but you have to be careful with them because using them can affect how a trade proceeds. This is a matter of a trader's choice. In order to get the best results I will provide traders with a normal Renko candles template and a Renko template using smC4Scalper candles.

I guess I spoke too soon since after refreshing the chart (first chart below) I get the same result except for candle color that is normal with smC4Scalper candles. Please note that the yellow dot indicates the trend of the candle.

Other indicators and EA
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The other indicators used for this system are as follows:

Infoboard - This provides traders with ATR information and fractal trends. As you all know there are more potential good trades to be had with an asset that has a high ATR such as WTI (10-day ATR over 200) than an asset with a low ATR such as EURUSD (10-day ATR of 61). Fractals show the trend for M1 to D1 timeframes but when trading with Renko it's best to look only from M1 to H1.

Renko brick size - Indicates current brick size of the Renko chart but can easily be changed using the STG Renko Chart Remote indicator.

Chart Trader 2.00 EA - This is a normal risk/trade management EA but the Reverse trade option is quite useful when trading with Renko since it will close the current trade and open a new one in the opposite direction.

Putting it all together
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Attached into the zip file are the indicators, the EA and the templates with normal Renko candles and with smcC4scalper candles. The first picture shows that the signal arrow of the HalfTrend TT is probably a false signal since the FxBay MACD is still positive. I was proven right since the second picture taken 20 minutes later shows that the signal arrow disappeared. All in all no matter what a chart tells you the best indicators that you have are your eyes.

I would appreciate if traders using this system would post their charts/results in order to help new traders that may not be familiar with Renko.
As my motto shows we all learn from out mistakes.

The way I trade WTI
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I trade this system but never before the London open and never 3 hours before the New York close. Before the London open spreads are usually higher
and the market moves slower. I never trade 3 hours prior to the New York close because opening trades at that time is more risky since many traders will close their trades during this period and best is to minimize risks. I also never keep trades open overnight.

There are many traders here that trade WTI because, like me, they think it's a good instrument to trade. I trade short-term but some traders prefer to trade
long-term. It's a matter of choice. There are four main advantages of trading WTI are:

1. It normally trends better than currency pairs;

2. The daily trading range (ATR) is normally high (140-180 pips) compared to the most popular currency pair EURUSD (ATR 50-70 pips). The higher the ATR the more trade you can squeeze in every day. This also means that you have more chances to recover from a lost trade the same day.

3. The cost of trading WTI is low, at least with my broker. For example the cost of trading, as represented by the margin for 10 lots of WTI
(pip value of $1 x 10) is lower than trading 1 lot of EURUSD (pip value of $10 x 1).

4. From EventsTrader post #9,402: "I'd probably add that WTI isn't session specific. There's volatility almost 24 hours a day. You might see more
volatility in the London/European sessions, and more so the US session. But it's always susceptible to volatility. As a day trader, that's what you want."


Additional information
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Enter into trades and some explanations using the original system.
https://www.energyexch.com/thread/po...0#post13269280

Problems with the Half Trend TT + 2 charts and how to trade.
https://www.forexfactory.com/thread/...2#post13224492

Choosing brick size.
https://www.forexfactory.com/thread/...2#post13119672
https://www.forexfactory.com/thread/...3#post13492043

Half Trend TT vs 3 non repainting Half Trend indicators + 3 charts.
https://www.forexfactory.com/thread/...5#post13162815

I never trade during the first week of the year because of low liquidity leading to higher spreads but sometimes it would have been good as shown on this chart. Looks like GBP is high on drug.

Hi H,

I've been messing around with various ideas to keep in the trend while not getting faked out getting chopped up,

1. Round numbers (Areas are magnets for indices)
2. Super Trend Indicator to help with fake outs from MACD and stay in the trend
3. Supoer Trend Indicator attached
4. See example screen shot below (Green arrows showing fake outs)

please see below together with the indi;

Many thanks Hutch for this thread!

Thanks for the thread. I recently approached the Renko world and I'm trying to refine the system to use. Yours seems convincing to me and I will definitely try it thoroughly!

I broke my own rule by being greedy. At one time I was up $3,000 and closed the trades even.

Do you use your Renko system on XAUUSD? If so, what are your box size settings?

Yes I use my Renko system to trade XAUUSD as a matter of fact I use that system for everything I trade. I use box size of $1. With some brokers you need brick size of 100 with price of 3 digits or brick size of 10 with price of 2 digits.

Hello Dane, could you please post a template of your chart, I'm having a little trouble with the settings. Thanks in advance.

Unfortunately, I have also just discovered that the SuperTrend Indicator does not work. It can not be loaded into the chart.