Renko Charts: What You Gain and What You Lose by Dropping the Time Axis

A Renko chart draws a new brick only when price has moved a set number of points. The time axis disappears, and with it a little of the noise. Renko shows the structure of a move well, but takes away information about how fast and on what volume the move happened.

What it is

The name comes from the Japanese “renga”, meaning brick. The brick size is set in points or as a multiple of ATR. A colour reversal usually requires a move of two bricks in the opposite direction.

Renko is a tool for organising price, not a forecasting indicator. It can be helpful as one of the layers on a chart.

How people use it

a clear trend structure without noise
averages and oscillators calculated on bricks
a change in brick colour as a signal

What the research and evidence say

Renko changes how the data is presented, not the data. Its value depends on what you use it for. Typical pitfalls are backtests run on brick prices (which don't correspond to actual trade prices) and choosing the brick size to fit history.

Weaknesses

no time axis: a brick formed in a minute looks the same as one formed in an hour
no information about volume or the speed of the move
results depend heavily on the brick size
backtests on brick prices inflate results

What order flow shows

Renko answers the question “where did price go”, and order flow answers “who took it there and how fast”. That's why these tools complement each other well: structure from Renko, and participant activity from the footprint, delta and the volume profile.

Indicators vs order flow

Every indicator and every pattern in this section is built from the same data: a candle's open, high, low, close and sometimes volume. They're derivatives of price, showing the effect rather than the cause. Order flow looks at what price is made of: who was buying and selling aggressively (delta), where limit orders were waiting (the order book) and at which prices the market accepted trade (the volume profile).

On CME futures this data is real and comes from one central market. Spot forex doesn't have it: platforms show tick volume, the number of price changes at a single provider.

To be fair: order flow isn't the Holy Grail. It takes learning, it can be noisy, big players hide some of their orders, and an edge only comes from a process and risk control. But it gives you information that simply isn't on a candlestick chart.

How to use it sensibly

use Renko as a structural layer, not your only source of information
choose the brick size to suit volatility, not the best historical result
check decisions against real prices and volume

Glossary: Renko chart
Glossary: ATR (Average True Range)
Glossary: Backtest
Atlas of biases: Overfitting
Order flow: How to read charts from a real market
Also under the microscope: Candlestick patterns
Also under the microscope: Head and shoulders
Also under the microscope: Double tops and double bottoms

This is the Renko with NYSE TICK and ADD in the Hetman Terminal (Trend Formation). Screenshot from the Hetman Index (IHA) – a training instrument, simulated data. See all the Hetman Terminal tools →

Frequently asked questions

What is a Renko chart?

A chart made of bricks of a fixed size in points, drawn only when price moves by that amount. It has no time axis.

Is Renko good for trading?

It helps you see the structure of a move, but hides time and volume. It works well as one layer of analysis.

Educational content, not investment advice. No signals, entries, stops or position sizes.