Renko charts have two methods for setting block size: fixed block sizing and ATR (average true range). ATR measures volatility, determining the amount of price movement needed to create new Renko blocks. Traditional Renko charts use fixed block sizing, such as 1%, for trend changes.
ATR
Renko charts use ATR, a measure of volatility, as the box size, as it fluctuates over time. These charts display a time axis, but the intervals are not fixed, allowing for varying brick formation times. One brick may take months, while several may form within a day
Traditional
The size of a traditional brick is fixed over time. Your trading style play a big part in determining the brick size. For example, I personally use a fixed brick size of 6 for the S&P 500 Index, which allows me to see the patterns, trends, and reversals more clearly to my liking.
Find out the pros and cons of each method in our latest blog post.