this morning I wanted to test an idea I had in mind for a simple trading system on Renko charts. For those of you that don’t know what Renko charts are… they are charts with bars not based on time but on price movements. You set a candle/box “size” and a new candle is drawn only if the price moves up/down of that amount of pips. Indipendently from how long it takes.
The setup is based on 2 pips box Renko charts. I’m actually testing on EURUSD only for now.
I’m using a 2 pips box size as I wanted to test the system for scalping. Usually if a trading systems works for scalping is even better for longer timeframes (read box sizes!!).
The main idea is to understand the relationship between the number of ticks that a renko bars takes to form. I developed a tick volume indicator that gives me a set of information: the number of long ticks, the number of short ticks, the difference and the sum of them. This for each bar.
It is still a “personal” indicator but I always wanted to publish it and I’ll do for sure in the coming weeks as soon as I’ll develop some data recording feature.
With my “tick volume” indicator I can count how many ticks it took to form that Renko bar. In my mind, when a strong trend is happening Renko bars take only a few ticks to form. And that was confirmed.
What I found out and it’s somehow unexpected is that bars that take a large number of ticks to form are important entry signals. I call them “heavy bars”.
I started trading using this signals and I’m very excited as I made 58 pips scalping entering soon after a “heavy bar” is formed and exiting when I have two bars of the opposite color (direction).
The entries are filtered based on trades taking more than 200 ticks to form but with different brokers/pairs results can be different.
Here’s a screenshot of my trades for today:
Trading 1 lot could have been near to $600! The larger loss can be around 6 pips (2 boxes + spread).
The amount of pips is net of spreads (less than 2 pips with my broker).
This weekend I’ll write an EA integrating the strategy so I can start forward testing the strategy on different pairs/boxes sizes.
That’s all for today.
Have a great weekend,
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