Using Renko Charts With No Indicators?! -- with David Moadel
hello and welcome to looking at the markets with David Modell did you know
that you can actually dispense with indicators if you use Renko bars or
Renko bricks call them what you will or you can use them with indicators as well
but maybe indicators technical indicators have been frustrating you
maybe you're leaving money on the table getting out of your positions too soon
whatever the case might may be we're going to talk about that I'm going to
show you a couple charts with the renko's versus the traditional
candlesticks before I get started I just want to let you know that I do offer
coaching for your trading or investing if you'd like to put together or want
some help putting together a trading or investing plan I have helped many people
with that you can contact me for that for the coaching at David Modell at
gmail.com alright let's get into the charts I'm on trading view here and in
this example Apple stock has gone up and up and up day after day because this is
a daily candlestick chart and everything I'll be saying with this can also apply
on different timeframes whether it's the 1 minute charts or 5 minute
hourly whatever it is all right because it's all just math alright and these are
indicators here that will adjust to whatever timeframe you you are using so
I would like to not cut my winners short I want to let my winners run and so if
anybody had just bought Apple and just held on to it for the ride up they would
have done really well but if you used let's say the upper Bollinger Band and
this is the these are the Bollinger Bands on trading view calm here on the
standard settings 20 period look-back period and the two standard deviations
in in both directions from the mid line alright so standard settings Bollinger
Bands and some people use the upper Bollinger Band as their indicator to
sell because it's overbought it's expensive supposedly but as you can see
if you had sold your position when it was above the upper Bollinger Band you
would have sold here and you would have missed out on all this upside here all
these gains right you would have sold here or here or here
or here all these are too soon it's it's still I mean it's gone up and up and
kind of sideways now but it could it could still keep going up there's no
reason to have gotten out of this trade so the Bollinger Bands if you used them
probably would have gotten you out of the trade way too soon with this Apple
stock what about the RSI on the standard setting 14 period for the look-back
period okay so standard settings for RSI and
you've got also standard settings for overbought which is 70 or above 70 I
should say okay so when did it go into overbought or expensive territory well
right about here so you would have sold here again way too early you would have
missed out on all this upside here all these gains if you considered you know
above 70 to be expensive or overbought and so technical indicators and
traditional candlesticks might be letting you down well have you
considered getting rid of the indicators alright so I'm gonna hit the X here to
get rid of the Bollinger Bands and I'm gonna hit the X here to get rid of the
RSI and then hey how about instead of using the traditional candlesticks we're
gonna try out the Renko bars some people call them Renko bricks all right and so
with Apple look at that you would have let's say you decided okay I'm not going
to get out of my position as long as the Renko bars are green okay green it's
very simple green means go like traffic lights right green means go red means
stop now that's a very simple system it might not be the best one and you could
probably or not probably but you might be able to do better than this using
other things than just the colors okay and it is possible to use indicators
with this okay or you can combine you know the color of the bricks also
looking at fundamentals some I like to do I also like to look at the
news and what's going on with the company and not just the chart by itself
all right but let's say let's pretend you kept it as simple as possible you
didn't look at the news you didn't look at the fundamentals you didn't use any
indicators you just took them all off and you just use the color well you
would have let's say whenever it turns green you get in ok
well with the Renko bars you would have let's even if you're just the most
recent run-up you would have gotten in here at the first sign of green and you
would have enjoyed this ride all the way up and still going because remember how
before I said there's no reason to get out of your position yet well that's why
this one is green and that's telling you no reason to get out of your position
yet now when you wake up the next day the next daily you know or I shouldn't
say daily because you know time has nothing to do with these bars but the
next price move I should say might give you a red brick and that could be your
time to get out all right and so you get to enjoy these run ups some really nice
ones okay like over here nice run up you know and then you'd perhaps sell on the
red one and then buy back at a very similar price to where you sold and then
enjoy another nice run up OK and then avoid this you know all this down action
all right but you would have enjoyed a really nice run up here and you'd still
be in the trade because you're letting your winners run and no indicators once
again so this is something to think about you would have enjoyed a lot of
gains that you would have missed out on because as you saw previously with the
traditional candlesticks and the Bollinger Bands or the RSI you would
have gotten out way way way back alright you would not have really gotten
in here at all at least in this area alright so let's take a look at I don't
know Microsoft just to give you another example of what that looks like
yeah Renko bars you would have enjoyed a lot of nice run ups okay
and maybe sold a few times unnecessarily but not for very long you would have
been right back in as soon as it prints a green Renko bar okay so and you'd
still be in the trade you know that it depends yeah we don't know what the next
Renko bars color is going to be it has not printed it yet and so you could just
wait until it prints the next bar and you're letting your winners run so just
a thought am i telling you to use this as your primary money-making strategy no
you have to decide your own strategy and have a plan okay and that is what I help
people with so again my name is David Modell if you want help putting together
a trading or investing plan I like to use charts I also like to use news
events and fundamentals things like that but if you want to work on just charts
that's okay if you want to work on just fundamentals that's okay you can email
me David Modell at gmail.com for that and if you want to use renko's with
indicators or with other things that's okay as well it's a decision you have to
make don't just use a trading strategy by itself without testing it out with
virtual or demo trading and making sure that's right for you and then it fits in
with your plan and respect respect your stop losses if you choose to use them
and use small position sizes with each trade and you'll probably hopefully be
alright alright thanks a lot I hope you learned something from this and I'll
talk to you again soon