trading

It’s 2019 and almost 80 percent of Americans are living paycheck-to-paycheck. Those numbers are staggering, and it’s important to recognize that that figure doesn’t just apply to individuals with low incomes. No matter how much you make — whether it’s $35,000 a year or $200,000 a year — the odds are high that you are not living within your means. When it comes to breaking that cycle, increasing your income via investments is an option worth considering. That being said, the markets are complicated and present quite a hurdle to overcome if you’re interested in investing. However, with a renko chart strategy, you can find a simple and effective way to begin to trade stocks well.

What is a renko chart?

You would be forgiven if you admitted that you’d never heard of a renko chart before. That’s because the most popular way to analyze a single stock’s performance is by looking at its candlestick patterns; not a renko chart. This type of graph gets its name from the vertical lines (or “candlesticks”) that plot data points as a stock’s value grows or decreases. A renko chart differs from this approach, because a renko chart plots data as blocks instead of lines (the work “renko” comes from a Japanese word which literally translates to “brick.”) The overall effect of this way of tracking a stock’s performance is immediately apparent upon comparing one approach with the other. Namely, a renko chart offers a much less volatile snapshot of any stock, smoothing its increases and decreases out over time so you don’t get too hung up on hourly or daily performance.

How do renko charts simplify investing?

Although candlesticks are the standard for synthesizing data about stock performance, that doesn’t necessarily mean it’s the best approach. For one, using a candlestick chart can be confusing since, depending on the scale you choose to analyze it with, the results can vary dramatically. There are other weaknesses to candlestick patterns beyond discrepancies by time frame, but it’s clear that such contrasts can potentially wreak havoc on your trading since tiny fluctuations can be misread. Renko charts avoid all of this guesswork by allowing you to choose how many points a stock must move upward or downward in order for a renko block to be created in the first place. This is a powerful approach, since more risk-averse traders can set their pip level to something higher, like 20 or 30, offering them much better information.

How can a renko chart strategy make you money?

You may have heard the old adage that the most effective strategy is the one that you can stick to, and that’s equally as true in the world of investing and day trading. Similarly, while the phrase “buy low and sell high” makes sense in theory, without the right data to act upon, it’s hard to tell when you’re truly buying on a downswing or actually selling on an upswing. A renko chart strategy can help mitigate some of these issues by providing you with more accurate information that is tailored to your own investment mindset. By choosing the right renko brick size and timing your trades appropriately, you will begin to make a profit and avoid the outliers that other traders view as signs to act upon.

With professional investors competing with you, it can be daunting to think about starting to day trade or even investing in the stock market all together. Despite the obstacles, investing can be an important element of building wealth and gaining a more responsible relationship with your finances. Finding a strategy that works for you is pivotal to your success in the world of investing, and one simple and effective method to approach investing with is a renko chart strategy. By offering a customizable way to think about your stocks’ performance, you can begin to make informed decisions that translate to major dividends in your life.