Renko Bars may be the ‘cleanest’ presentation of true price action with the time element removed.
If you recently found out about Renko Bars, you may believe that it is the answer to your trading woes but unfortunately the first glance is way more exciting that the actual trading ability of the charts.
I try to simplify Renko Bars and at the same time analyze strategies that may be helpful, if any at all.
In order to develop a successful trading strategy you need to create a ‘recipe’ or ‘algorithm’ aka ‘algo’.
Below are essential ‘ingredients’ for a successful ‘trading recipe’ that each trader needs in order to establish a successful career day trading.
- Identify your personality type (ie Myers-Briggs etc) and how that impacts trading.
- Understand that it is NOT A HOBBY, it is a business and requires entrepreneural spirit and execution discipline.
- Risk Management / Trade Size / Cash Management / Margin Management will kill you if not adhered to without exception.
- Trading Plan – If you don’t have one written down, you are playing with a hobby
- It is NOT about the amount of winning trades, but the amount of losing trades that determine your success.
- A very important indicator is the ATR – Average True Range. If this is not the foundation of your trade, you need to have good reasons why not and its replacement should add significant value.
- Baseline – The main indicator used to signal the trend of the trade you will take and when a trade setup may be developing.
- Trend Confirmation Indicator – You can use your favourite indicator which will alert potential trades
- Volume Indicator (Volatility) – No trend can continue without significant volume supporting it.
- 2nd Trend Confirmation Indicator
- Exit Indicator