Time and Bricks

When trying Renko charts, many traders will watch the charts and see that nothing seems to be happening. The Renko chart bricks have not moved. Often, when seeing this, the trader believes something is wrong. This is not an error in the feed. It represents hesitation. The sentiment is not able to register a change. We can call this pause in the Renko charts bricks a silent Doji. The trader, upon sensing the silence, should Figure 8.15 U.S. Crude Oil Renko Block .25, Interval Ten Minutes Source...

The Bloomberg United States Financial Conditions Index

The Bloomberg United States Financial Conditions Index (BFCIUS) reflects conditions in the money market, bond markets, and equity markets. Figure 6.14 shows the dramatic upheaval that the financial crises engendered. The index values are standard deviations from a normal condition. On February 22, 2007, the BFCIUS hit a high score at a level of 1.198 Z. Figure 6.14 BFCIUS Bloomberg United States Financial Conditions Index Z is a statistical term representing the number of standard deviations...

What is Renko Charting

Renko charting is a tool that represents price movements by using bricks. Renko is the Japanese word for brick. If a price has moved higher by a prescribed amount, we add a new brick. We can select the color it is usually green, white, or gray. If the price has moved lower by a prescribed amount, a new block, whose color is usually either black or red, appears in the opposite direction. The computational logic for constructing a Renko chart, shown here and illustrated as a flowchart in Figures...

Kagi Chart Basics

Kagi means key in Japanese, and the idea behind using Kagi charts is to use them as a key to detecting turns in sentiment more effectively. The best way for a trader to use Kagi charts, like Renko charts, is after the trader has decided upon the direction of the next trade. Once the trader makes a directional decision, the challenge is to find the optimal entry point. Of course, there is controversy as to what is optimal. Generally, there is no best place to enter a trade, but there are many...

Trading in the Direction of the Trend after a Counterreversal Block

This strategy entails the following five steps 4. Place a buy stop order or a sell stop order. 6. Let's look at these steps in order. For traders who want to join the existing trend, a key step is confirming what the trend is. This popular strategy is greatly enhanced by the use of price break charts. When a trader uses price break charts, the strategy is redefined as trading with the prevailing sentiment. To find the prevailing sentiment, the trader simply needs to confirm what the latest...

Introduction

The purpose of this book is to give beginning and more experienced traders a fresh look at the principles and applications of alternative charting types. These charts share one significant attribute they display information independent of time. These types include price break Kagi Renko point and figure, and cycle charts. These charts are important because when the trader applies them correctly, they provide different views of the shape of market sentiment as well as the shape of trends. The...