long term position trading -primarily etf's-

[justrading]

Hi Just-
Agree- if you don't get to make use of something, and are paying for it - it's a waste.
I make limited use of stockcharts, within the time available- Other sites may offer just as much- for less. What do you now use for charting?
There's a lot available- commentary, screener, access to other chart lists that others post etc- but I don't take advantage of those aspects. I am so accustomed to those features I do make use of- like the horse returning to the barn- I haven't really looked closely elsewheres-
but wanted to share the couple of links for what looks to be a lot for Free.
I think FINVIZ allows a free registered user to have up to 40 chart lists-in his name-
I may get around to doing a comparison in the future-
Money is money- after all- A smart shopper wants value for what they pay for.
Have a good day! Thanks for posting!

I have been using Sierra Charts for charting for a long time. It has pretty much anything you want at the price of a monthly fee and a very steep learning curve. The primary reason I use it is everything you see on your chart and all installed indicators are recorded on a spreadsheet study you can attach, and I transfer that data to Excel for analysis. I found I can't trade without a quantitative perspective, so this is invaluable.

Stockwatch was primarily for options data when I was experimenting with delta neutral spreads. I did ok but a Bernanke statement that moved the markets significantly drove home the point that delta neutral is fine within defined limits, and given time and within cost efficiency, one can adjust. Sharp moves destroy profitability, and if I have to accept directional risk, I would rather do so without capping my gain. A year's study there, but I am the better for knowing this.

Your comments on Renko just happen to coincide with my experimenting with it. I have much to share but the wee hours of Sunday morning my time are not when I want to do so. Next week I will hopefully find the time to discuss this with you. It is really fascinating.

 

[sowterdad]

A FINAL RENKO DAILY CHART- INTRODUCING A COUPLE OF MOVING AVERAGES-FOR REFERENCE.
This is just an outline of a basic chart and the beginning of potentially analyzing a trading
approach with the information given here. This is NOT A trading approach itself- but an outline -initial draft- to develop some ways to enter, exit, hold.
RENKO charts look so smooth and 'easy' Renko charts do not show gaps -up or down.

My thinking is that I- or other traders- should be able to develop some testable concepts employing Renko Charts and some Rules .......that i could consider in my own trading.

 

[sowterdad]

starting at the beginning-
a daily chart of SPY.
This is a conventional candlestick chart with a moving average-
there are periods of sideways price (chop zone), periods of uptrends, and periods of downtrends. In essence, these are the 3 large conditions that price transitions through.
A trader may fare well during strong trending periods, but get caught in the chop zone.
The premise of employing a Renko chart, is that it would inform the trader of moves of substance, and ignore price noise.

 

[sowterdad]

THE PRIOR RENKO CHART ILLUSTRATED A CLOSE SETTING- THEREFORE IT DOES NOT REFLECT THE WIDER RANGE PRICE COULD TRAVEL -
THE HI-LO SETTING ON THE SAME RENKO CHART PROVIDES THE CHALLENGE OF ADDITIONAL BRICK FORMATIONS AND MOVEMENTS.

 

[sowterdad]

I went back to the beginning of 2014 on the chart
Allowing price x number of red bricks to decline allows for "normal' volatility and normal price swing lows within the uptrend-
When price is trending, the trend is often defined as a series of higher highs and higher lows. I think that becomes very recognizeable on the renko charts-
One could simply determine that they will allow a certain number of red bricks to form
before exiting a trade. If one does that, one has to understand what the % value of each brick represents- In this chart, the 2014 value of the red brick allows for a 1% point move at that period in time, based on looking back from present day pricing- which calculated to be .8% as the ATR value of the higher price-
One also has to be aware of the unseen "invisible" price action that can occur below the low of the red brick- that does not form a new brick.
I put in a few trend lines- but perhaps they should have been drawn from 1 atr value under the low of the red brick to account for the lower invisible price movement.
There is no rule that says the first 2 swing low points - and the trend line drawn- will remain in effect- A higher swing low may pullback causing a lower trend line- but the uptrend may still be intact- Trend & channel lines on Renko charts should be as valid as trend lines on a bar or candle chart.
Let's be sure to include a disclaimer:
What I post here is simply for further evaluation by myself and anyone reading this. Whether it's application has any merits in one's approach is an unknown, and needs to be tested. I hope to demonstrate some of the testing process- Those with some trading systems software could probably effectively backtest RENKO application .
I feel optimistic that an approach employing RENKO charts will be beneficial for larger gains,longer trades, because it reduces the extraneous input one wants to react to.
Kind of similar to why I assume they put blinders on the side of a race horses eyes- so he keeps focused on the track ahead and ignores the distractions on the sidelines.
Today- Sunday, I hope to post a daily chart or two- including some analysis of stops- aggressive and relaxed.

 

[justrading]

Some of my early findings and thoughts on Renko.

I became interested as a result of trading forex. The market is open continuously from Sunday 5pm EST to Friday 5pm EST. It seems more logical to view price as a continuous stream rather than artificially break it up by time which really has no meaning. I then came upon a piece that mentioned Renko, and so decided to look deeper.

I was looking to replace 1 hour and 4 hour charts, which is where I find my entries. I found that the recommended setting is between 5% and 20% of ATR. Since 5% is 1/20th of the day, I thought it would be a suitable replacement for the hourly charts. Well, I immediately found that as bricks are independent of time, I was getting 55-85 bricks per day. Thinking I could reduce that, I went up to 10%, but detailed analysis and comparison showed that many of the signals on the 5% setting were simply lost on the 10% setting.

For the 4 hour chart, it seemed logical to simply multiply the setting by 4. I am beginning to doubt that this is suitable and will experiment with 3 times, ie 15%. I have looked to the 4 hour chart to support entry decisions on the 1 hour chart. With candlesticks that has worked fine, but with Renko there seems to be a huge lag from the 5% chart. I suppose this is because the smoothing effect of Renko means relationships are not linear as in candlesticks.

One caution though. I have used candlesticks for years and pretty much instantaneously can tell what price is doing looking at a chart. It could well be that viewing a Renko chart in the same way is completely wrong and I need to relearn this and redefine what I consider to be valid entries. To this end I am just picking up entries on charts and then trying to define exactly what I would see in real time that would tell me it is a valid entry. Once that is done, I then go over a few months of charts and see how valid that definition is. Bit tedious but at the same time I do get a better feel for Renko.

Once this is sorted out I will move on to the daily chart. Look forward to reading more of your thoughts on this. I did search this forum but found precious little on Renko.

 

[Cmoss]

I too found very little on Renko here, for me Renko seems to clean up the mess between pricing. I am seeing some success in day/scalping. This thread has been interesting to see how Renko could be used for longer term trading.

I liked seeing the SPY charts, as just about everyone has had experience trading it.

 

[sowterdad]

I too found very little on Renko here, for me Renko seems to clean up the mess between pricing. I am seeing some success in day/scalping. This thread has been interesting to see how Renko could be used for longer term trading.

I liked seeing the SPY charts, as just about everyone has had experience trading it.

I'm glad you are having some success- I'm trying to work through possible approaches to applying RENKO- Next chart is a daily- I tossed in some trend lines- didn't use them -
but then added some specific rules- take each and every trade signal when presented- for entry levels and exits-stops based on the Daily Renko
I think this is the process I can use to backtest how well it- or a similar approach would work on longer term position trades.
I intend to drop down into faster time frame charts in a similar manner.
Please add your experience or comments -as you see appropriate!
Thanks for Posting!

 

[sowterdad]

This Daily Renko chart- SPY
has some trend lines from swing lows illustrated,
but in the same chart I added some Rules to Evaluate for Entry and Exits on specific Renko
Bricks- Example- Have a 2 red brick stop-loss under the active brick low.
Use a buy-stop entry one atr value (bullish brick generated here) above the high of the last decling red brick.
I intenionally started with a Buy at the chart open high, realizing it's an intentional loss on my initial entry.
Some things worth mentioning- Renko does not show gaps- and so I worked with the values each brick gives me.
I arbitrarily selected 2 red bricks as the allowable amount of decline for that chart study-
One could choose any number they desired- Taking proifits on an earlier exit , locks in a higher gain. From the beginning of the chart through the sell and recovery in October, The Renko approach outperforms the buy and hold up through that point in time-
The early purchase of the new Renko brick caught a nice 8.8% profit when that single trade stopped out. Net results in that space was Renko method gain 17%, Buy and Hold gain 11%. That is a substantial positive difference favoring employing an approach that limits your downside- vs the unlimited downside of a buy and hold position.
the remaining trades in the year entered into some whipsaw conditions and several losses in a row.
In the End of this chart, The Buy and Hold- unlimited Risk investor gained 15.9%
while the Renko approach settled in at 14%.
Without trying to "fit" or optimize the trading approach to reduce whipsaw trades,
I like this basic -no frills- approach - It protects from a large downside move.

There were 4 losing trades averaging -3% from the entry.
There were 6 winning trades +23.2% for 3.8% gain avg. Largest win trade 8.8%
smallest .7%.

This trend trading approach works best in trending conditions- capturing larger gains in uptrending periods.

 

[sowterdad]

DROPPING INTO A FASTER TIME FRAME, i'LL LOOK AT THE 1 HR CHART.
INSTEAD OF THE HI-LO, I WILL USE THE CLOSE SETTING TO START.
BECAUSE OF THE LARGE NYMBER OF BARS, I WILL SEGMENT THE CHART INTO 2 SEGMENTS .
1ST CHART IS SIMPLY THE FULL CHART HI-LO