Renko charts are a unique way to view price action, filtering out minor price fluctuations and focusing only on significant moves. Unlike traditional candlestick charts, Renko charts are based on price movement rather than time, making them ideal for scalping quick, clean trades. The Renko chart scalping strategy allows traders to capture small but consistent profits with greater clarity and less noise.

In this article, we explain how the Renko chart scalping strategy works and how to apply it effectively across different markets.

What is a Renko Chart?

Renko charts build bricks of equal size, each representing a fixed amount of price movement.

• A new brick forms upwards when price rises by a set amount.
• A new brick forms downwards when price falls by a set amount.
• Time is irrelevant — bricks form only when price moves enough.

This makes trends and reversals much easier to spot.

Why the Renko Chart Scalping Strategy Works

• Reduces Noise: Filters out insignificant price fluctuations.
• Clear Trend Detection: Trends and reversals appear cleanly and visually.
• Focus on Price Action: Simplifies decision-making without the distraction of time.

How to Set Up Renko Charts for Scalping

Here’s how to prepare:

1. Set your chart type to Renko in your trading platform.
2. Choose an appropriate brick size:
   • Smaller bricks for faster, more frequent trades (e.g., 5 pips for forex).
   • Larger bricks for more stable moves.

Adjust the brick size based on the asset’s volatility and your scalping goals.

How to Trade the Renko Chart Scalping Strategy

Here’s a structured approach:

1. Entry Strategy

• Buy Signal: Enter a long trade when a new bullish (upward) Renko brick forms after a series of bearish bricks, especially after a significant support level.
• Sell Signal: Enter a short trade when a new bearish (downward) Renko brick forms after a series of bullish bricks, especially near a resistance level.

For stronger signals:

• Confirm with momentum indicators like RSI, MACD, or moving averages.
• Look for breakouts of horizontal levels drawn on the Renko chart.

2. Stop-loss Placement

• Set a tight stop-loss just beyond the last swing low (for buys) or swing high (for sells).
• Alternatively, place the stop one or two bricks beyond your entry point to allow minor fluctuations without being stopped out too early.

3. Profit Target

• Target quick profits: 2–5 bricks per trade.
• You can also exit once an opposite-coloured brick appears, signalling a potential reversal.

Scalping with Renko requires quick reactions, so predefining your exit plan is essential.

4. Risk Management

• Only risk a small fraction (0.5% to 1%) of your trading account per trade.
• Use consistent position sizing to handle a series of wins and losses confidently.

Best Practices for Renko Scalping

• Trade During High Volatility: Active market hours (like London or New York sessions) provide more reliable Renko brick formations.
• Combine with Indicators: Moving averages or MACD can filter out poor quality setups.
• Focus on Strong Trends: Renko charts highlight trending conditions beautifully. Avoid choppy sideways markets.

Renko Breakout Scalping

A powerful variation is breakout scalping:

• Upward Breakout: Enter long when price breaks above a well-defined resistance with new bullish bricks.
• Downward Breakout: Enter short when price breaks below support with new bearish bricks.

Breakouts on Renko charts are often clearer and easier to act upon than on traditional candlestick charts.

Common Mistakes to Avoid

• Using the Wrong Brick Size: Too small results in too much noise; too large misses opportunities.
• Overtrading: Stick to high-probability setups and avoid forcing trades.
• Ignoring Confirmation: Always seek confluence from indicators or previous support/resistance levels.

Advantages of the Renko Chart Scalping Strategy

• Smooth Visuals: Easier trend recognition without time-based noise.
• Clear Trade Signals: Simple brick colour changes guide entries and exits.
• Flexible Application: Works across forex, stocks, commodities, and indices.

Conclusion

The Renko chart scalping strategy offers traders a clean, simple way to identify and capture quick profits in trending markets. By focusing on price movement, using tight stops, and applying disciplined risk management, traders can enhance their consistency and success rate.

To master innovative techniques like Renko chart scalping and build a complete high-speed trading system, explore our expert Trading Courses designed to help you trade with greater precision, discipline, and profitability.