Renko Chart Basics: A Beginner’s Guide to Reading & Trading (2025 Update)

Renko chart basics are surprisingly simple once you understand how the bricks form. Renko charts slice through market noise by plotting price movement in fixed-size “bricks,” letting you spot trends faster and stay in winning positions longer. If you’ve ever felt overwhelmed by candlestick wicks, inconsistent bar sizes, or whipsaws, this beginner-friendly guide will show you why Renko might be your new secret weapon.

1. What Is a Renko Chart?

A Renko chart (the name comes from renga, the Japanese word for “brick”) ignores time altogether. Instead, it draws a new brick of fixed height whenever price moves far enough in either direction. Each brick is usually colored green (or white) for upward moves and red (or black) for downward moves. Because Renko hides small, back-and-forth price changes, trends appear as clean staircases instead of jagged zigzags.

Here’s the core logic:

1. Choose a brick size—e.g., $1, 10 pips, or 1× ATR.
2. If price closes ≥ brick size above the previous brick’s close, plot a new green brick.
3. If price closes ≥ brick size below the previous brick’s close, plot a new red brick.
4. Time is irrelevant: one brick could form in a minute during high volatility or over several hours in a quiet session.

Result: clearer up-trends, down-trends, and reversals you can trade with confidence—no more guessing whether that long upper wick matters.

2. Renko vs. Candlestick Charts – Pros & Cons

Renko isn’t a silver bullet, but understanding how it differs from standard candles helps you decide when to use it:

Renko Charts	Candlestick Charts
Filters noise; each brick equals meaningful price movement.	Plots every time period—even dull ones—so sideways markets look messy.
Clearer support & resistance lines; tops and bottoms align neatly.	Wicks distort levels (esp. intraday).
No time axis → forces you to focus on price action.	Includes time but also distractions (news candles, lunchtime chop).
Late entries on sudden breakouts (needs brick confirmation).	Faster signal on breakouts, but more false moves.
Great for trend-following & swing trading.	Preferred for scalping news bars or volume analysis.

Key takeaway: Switch to Renko when you need a crystal-clear trend view or want to remove emotional whipsaws. Keep candlesticks for high-frequency tactics that rely on intra-bar information such as volume, wicks, or specific open/close times.

3. Choosing the Right Brick Size

Your brick size is the single most important parameter in Renko trading. Too small and you’ll relive the whipsaw nightmare; too large and signals arrive late. Below are three proven methods:

3.1 Fixed-Tick (Manual)

Pick a round number (e.g., 10 pips on EURUSD, $1 on AAPL). This keeps charts visually consistent and is popular for backtesting because of its simplicity. Downside: fails to adapt when volatility expands or contracts.

3.2 ATR Multiplier (Adaptive)

Multiply the Average True Range by 1–1.5 on your timeframe. Example:

Brick Size = ATR(14) × 1.2

Benefits: flexes with market conditions, keeps roughly the same number of bricks on screen over time. Try ATR × 1 on slow markets and ATR × 1.5 on volatile ones.

Resource: ATR Brick-Size Calculator →
Watch my video on Free Renko Brick Size Calculator (Google Sheets)

3.3 “Walk-Forward” Backtest (Hybrid)

Start with ATR × 1.2, then run a quick backtest in TradingView. Increment brick size ±10 % until net profit / max drawdown looks reasonable and the equity curve is smooth. Lock that value, but re-test monthly or after major volatility spikes (e.g., Fed decisions, crypto crashes).

4. Step-by-Step Guide: How to Build a Renko Chart and Add RSI or MACD

1. Open your chart (AAPL in this example).
2. Click the chart-type dropdown (top toolbar) → select Renko.
3. Choose Traditional or ATR bricks.
   
   (Tip: ATR bricks auto-update brick size; Traditional uses a fixed value.)
4. Set your brick size (e.g., 1 ATR).
5. Click ⚙️ Settings → enable “Wick” if you want shadows, or keep it disabled for a cleaner look.
6. Add indicators: Supertrend, 200-EMA, or RSI to confirm breakouts.

Video walkthrough:

5. Case Studies: Stock vs Crypto

5.1 Stock

Discover how to use Renko charts with the Supertrend indicator in TradingView to detect early trend reversals and capture longer trends with minimal noise. This Renko trading strategy tutorial features real chart examples with AAPL, MSFT, and WM, showing entry and exit signals, estimated profit targets, and performance results from the TradingView strategy tester.

5.2 Crypto – BTCUSD Daily

I asked ChatGPT-o3 to analyze Renko charts for the S&P 500, TGT, BTC, and TSLA. In this video, I test its ability to interpret Renko trends and deliver actionable trading insights. Watch as I explore how well ChatGPT-o3 handles Renko chart analysis, and stick around for a breakdown of its strengths and weaknesses in market forecasting.

6. Renko vs. Candlestick Charts – Pros & Cons

Switching from candlesticks to Renko isn’t just a cosmetic change—it shifts how you interpret price action. The table below highlights when each view shines.

Renko Charts	Candlestick Charts
Filters intraday noise Only prints a brick when price moves the set amount.	Plots every time interval—even dull ones—so congestion looks messy.
Smoother trendlines & S/R levels Bricks align like Lego blocks.	Wicks poke through levels; trendlines often need wider buffers.
No time axis Keeps focus on pure price movement.	Time axis helps time-based strategies (opening range, session close).
Can be late on explosive breakouts (needs full-brick confirmation).	Captures breakouts faster, but more false moves / whipsaws.
Favoured by swing & trend traders; pairs well with Supertrend, EMA, Ichimoku.	Favoured by day-traders & scalpers; integrates volume, wicks, session opens.

Key takeaway: Use Renko when you crave a cleaner, trend-focused lens—and flip back to candlesticks for fine-tuning entries around news bars or volume spikes.

6. Common Mistakes Beginners Make

By mastering these Renko chart basics you’ll avoid the most common rookie errors and keep your trading rules crystal clear.

• Brick size too small → chart looks like candlesticks; signals fire every few minutes.
• Trading against the higher-timeframe trend—always zoom out one timeframe.
• Ignoring basic risk management—Renko cleans up the view, not probability.
• Over-indicator syndrome—stick to 1-2 confirmation tools (e.g., EMA 200 + Supertrend).
• Forgetting to adjust brick size after volatility shifts (earnings, NFP, crypto halving).

7. FAQs

What timeframe works best for Renko?

Daily or 4-hour charts suit swing traders, while 5-minute Renko is popular among scalpers. Match the timeframe to your holding period and backtest at least six months of data.

Can I use Renko charts on crypto?

Yes. Because crypto is volatile, start with ATR bricks so the chart adapts automatically. A brick size ≈ 1× ATR(14) on the daily often balances noise and signal.

How often should I adjust the brick size?

Check ATR values monthly, or whenever market volatility visibly changes (Fed meetings, major earnings, geopolitical events). A 10–20 % swing in ATR is a good trigger.

Do Renko charts show gaps?

No. Renko only plots bricks after the price has moved by the specified amount, so overnight gaps appear as a series of bricks rather than single jump candles.

Does Renko work with volume-based strategies?

Yes, but volume isn’t shown natively on Renko, so overlay a separate volume pane or use indicators like On-Balance Volume (OBV) for confirmation.

How do I backtest a Renko strategy in TradingView?

Open the Strategy Tester, set the chart to Renko, and choose the same brick size you plan to trade live. Remember to switch the Tester to “Every Tick” for more accurate intra-brick fills.

8. Next Steps

• 📈 Renko Buy/Sell Signals Guide → Read now
• 🧮 ATR Brick-Size Calculator → Use the sheet
• 🖥️ Thinkorswim Renko Setup Tutorial → Watch & read
• 🚀 Advanced Renko Strategies → Level up

---