This renko chart trading system has become quite a topic of conversation across the internet. Spinoff threads have been created by many who didn’t like the original systems and time frames and wanted to trade the system in slight different ways.
Nitro Scalping used a very basic chart although, many have simplified it further by removing some of the indicators.
“Nitro Scalping is a trading strategy using RENKO bars instead of candles (although some still use candles).
We try to stay focused on PA (price action) instead of relying on indicators, which nearly always lag price. Our goal is to trade pure PA capturing 3-10 pips per trade.” (source: ForexFactory Sept 2009)
How To Trade Nitro
This system uses renko bars to display price. Some recommend buying a commercial version of the renko charts but we have several renko chart indicators you can try and see if you can get it to work with them. Also if you are going to try this renko trading system in ninjatrader it has it’s own, pretty solid, renko indicator.
The system suggests that you open 4 charts of these pairs: EY, GY, AY and either NZD/Y or CAD/Y and then during specific trading times you watch for CORRELATION in price movement between the 4 pair. USD/JPY can also be watched, but is normally not traded.
We are looking for all 4 pairs to be moving in sync. When this correlation is spotted (and it occurs at least once during every trading session) you can take your trade in all pairs or just focus on one or two. Your choice.
All indicators for this system (apart from the renko bars which can be found on the renko pages) can be downloaded from one file here Nitro: Renko Trading System.
-Use the sm trix-colored candles (smC4scalperCandles) to color the renko bars, settings 2,1,1,1, indicator attached below.
-DX Trade wrote a neat ‘dashboard’ which some use.
-A HMA color line is used as moving average, settings are 8,3,3 or 10,3,3. Some use other settings or you can use the MA in Color with Applied Price.
-Momentum indicator set to 4 is a standard MT4 indicators.
-A Trix indicator is also used but it is built into the dashboard & into the candles.
-Nitro arrow indicator based on momentum that many find useful
It is suggested that you will “learn fastest from the charts posted” on the various trading boards and specifically forexfactory.
Once “CORRELATION” is noted, we are looking for a ‘primer’ which could be trix-colored candles changing color, then a ‘trigger’ which could be the moving average cross.
The rules are not set in stone as people find their own favorite primers and triggers.
The object, once again, is to learn how to ‘see’ from PA alone where price is going next and then to capture only a fraction of that move.
Studying the charts posted in this thread is the best way to learn how to do this successfully.
Best Hours to Trade: just before & during major market opens, i.e. Tokyo-London open or London-US Open. Renko bars can be traded anytime but best PA is during those overlap times.
“Some traders just wait for correlation, then pick the strongest pair and put a 5 lot trade on that one. 5 pips profit x 5 lots = 25 pips. They are done for the day
This is not a strategy to become a mega-millionaire, just to make a comfortable full time living trading Forex. 25 pips a day trading full lots is $250 per day, 50 pips (two 5 lot trades in the example above) is $500 per day. Most can survive on that.”
The method is 25% mechanical .. 75% emotion. So they say. Which is one of the problems with this renko ystem. It still is discretionary trading rather than mechanical.
Then only other issue with this renko trading system is the risk to reward ratio. They a scalping a few small points here or there but risking up to 20 points with their stops. Granted it does seem to have a great strike rate but I feel you are always fighting a losing battle when the numbers aren’t in your favour. Although I am sure there will always be someone who is good enough to pick 95% winning trades I think the rest of us may not be so luck.
However, there are some good ideas behind the concpet that you can take away with you and if you read the forums about this renko trading system you will soon see which indicators have been dropped, which are considered important, which are the best trades to take.
Visit forexfactory.com for more information. A search for Nitro Scalping, NItro Variations and C4 Scalping should get you all the information you need.