One particular of the traps most Forex traders get sucked into is the "Search for the Holy Grail," also recognized as the Search for that One Method that will put me on Hassle-free Street. In this article I'll explain why there is no such thing as a "Holy Grail" trading system and how to identify which Forex trading technique functions most beneficial for you.
In just about every book, article and blog post I've ever written, I inevitably finish up writing the following: There IS NO Holy Grail when it comes to Forex Trading. The closest you will ever come to obtaining "perfection" in the Forex markets is Cash Management. Those who master Revenue Management capabilities can outlast any downturn, reversal or run of bad luck and reside to trade yet another day.
In spite of my continuous proselytizing, consumers are nevertheless particular that "best" trading system is out there somewhere, waiting to be found.
As significantly as I Enjoy Renko Charts, I am the 1st to admit they are not great, and I have days trading when I would be far better off going back to bed and forgetting about Forex for the day. The reason this happens is the Forex markets are never constant. That means for the next 30 minutes the industry could be trending solidly in one direction, and in minute 31 some occasion (scheduled or otherwise) can occur that will instantly wipe out whatever gains had been made in the earlier half hour.
Does that happen every day? No. But it takes place typically sufficient that traders are forced to preserve in thoughts the possibility of it happening, and that can influence how they trade. No charting strategy, no system, no robot trader can guard you from these sudden vicious reversals.
So keeping all of that in thoughts, the question remains: what is the preferred trading method to use with the Renko Charts?
The answer is rather simple: Get when you see a blue (bullish) candle close, Sell when you see a red (bearish) candle close. The bigger the Candle/Box size you are utilizing for your Renko Charts, the significantly more likely you are to see a further candle of the very same color close.
My studies have shown repeatedly that if you use a ten pip Candle/Box size, there is a 78% opportunity the next candle that closes will be the identical color as the most recent closed candle. This signifies you have an virtually four-1 likelihood of seeing an additional 10 pip move in the present direction. All that is left for you to do is TAKE THE TRADE!
There are particular indicators you can add to your chart (such as the Heiken Ashii Smoothed, the Slope Path Line, the BBand) that will give you entry and exit signals that also give you a much better than 50/50 likelihood of capturing the middle component of each and every price move (once again, when utilizing 10 pip Candles/Boxes).
There is a school of believed in the investment world that believes it is best to try and capture the middle third of any move, beneath the belief that it is impossible to accurately gauge the beginning of any trend, and equally impossible to know when a trend is about to collapse.
If you happen to subscribe to that theory, then by all signifies add as many indicators as you uncover important to isolate that "middle section" and trade accordingly.
Still, applying Renko Charts you have a distinct advantage over the "middle " traders in that you can clearly see on your charts exactly where trends, start, how lengthy they final, and where they finish.
And in terms of becoming in a position to open your charts and know with a practically 80% degree of certainty that you are going to bank a minimal of ten pips, nothing beats trading naked (without any additional indicators) and just entering a trade in the direction of the prior candle.