Renko Charts: The Complete Trading Strategy That Eliminates Market Noise

ELI5/TLDR

A normal stock chart records everything: every wiggle, every minute, every time price twitches up and down. Renko charts throw most of that away. They draw a new “brick” only when price moves a fixed amount in one direction, so the chart looks like a tidy staircase instead of a heart monitor. The whole video is one claim repeated many times: the only thing that matters is how big you make each brick. Get the brick size right and, the presenter says, you’re 80% of the way to an 87%-win strategy. His formula for brick size is “half of ATR-14,” and he dresses it up as a lost Japanese trading secret.

The Full Story

What a Renko chart actually is

A candlestick chart marks time on the horizontal axis. Every fixed interval — a minute, an hour, a day — it draws a candle, whether or not anything happened. Renko ignores the clock. It only draws a new box, called a brick, when price has moved by some preset distance. If you set the brick size to 50 points, a green brick appears each time price climbs 50 points; a red brick appears each time it falls 50. A quiet day that drifts 20 points produces nothing. A trending day produces a clean column of same-colour bricks.

The point is to strip out what traders call noise — the small, random back-and-forth that means nothing.

“The beauty of the renko charting itself is to eliminate the noise completely and to just concentrate on the trend part.”

The trading rule that falls out of this is almost insultingly simple: buy when a new green brick forms, hold until the first red brick appears, then sell and flip to the short side. Two colours, two actions. The presenter even strips the small “wicks” off the bricks to make the staircase smoother, on the logic that wicks reintroduce the noise Renko exists to remove.

The one thing the whole video is about

Strip away the repetition and there is a single idea here: brick size is everything.

“Eighty percent of your success purely depends on how well you have understood the renko bricks… once you get the right brick size, you’re done. The other things is just an add-on.”

He spends the rest of the video answering the question people apparently email him constantly — what number do I put in the box-size field? His answer: take the ATR-14 value for your chart and halve it.

ATR stands for Average True Range. It is a standard indicator that measures, roughly, how much an instrument typically moves over a period — its recent volatility, in points or dollars. ATR-14 is that average over the last 14 bars. So if Bitcoin’s daily ATR-14 reads 529, his brick size is 265. If Nifty’s 30-minute ATR-14 is 53, the brick is 26. He runs through Bitcoin, Dow, crude oil, a currency pair, Nifty and Bank Nifty, doing the same halving each time. The instrument doesn’t matter, he insists, and neither does the time frame. Only the brick size.

The “lost Japanese secret” framing

A lot of the runtime is mythology. Renko, he says, dates to 1830s Japan, where traders supposedly outperformed today’s screen-jockeys precisely because they had no indicators to distract them.

“They were simple down to earth people who believe that simple things works much better than anything else.”

The original method, he claims, was to take the absolute range (high minus low) over the last nine periods, average it, and halve it — and this knowledge was largely “destroyed in World War Two.” His ATR-14-halved formula is presented as a modern reconstruction that lands within “one to two percentage” of the old way, just easier to compute. He also gestures at Japanese numerology — threes, nines, thirteens — to justify revising his stop-loss on the third brick, tying it to the fact that the old Tokyo market traded Monday to Saturday.

Treat all of this as flavour. None of it is sourced, and “the documents were lost in the war” is doing heavy lifting.

The actual mechanics he gives you

Buried under the storytelling are a few concrete rules:

Entry: go long on the first green brick after a red sequence.
Initial stop: the base of the previous red brick.
Stop revision: move the stop up once, when the third green brick forms. After that, leave it.
Exit: hold until the first red brick, then exit and reverse.
Refresh the brick: because ATR drifts as volatility changes, recompute it every seventh period and re-set the brick size if it has moved much.
Optional indicator: for people who insist on one, he bolts on a SuperTrend (period 10, multiplier 3), while admitting he doesn’t believe in indicators because they’re just “a derivative of the price movements.”

Picking a time frame by what you can afford to lose

His one genuinely sensible idea: stop asking which time frame is “right.” Instead, decide the maximum you’re willing to lose on a trade, then find the time frame whose ATR-14 equals that number.

“The right question to ask is how much you can afford to lose, then try to find out which time frame defines that particular points.”

If you can stomach 50 points on Nifty, and the 30-minute chart has an ATR-14 of 50, then 30 minutes is your time frame and 26 is your brick. Once you enter on a time frame, he warns, stay on it — don’t jump between charts mid-trade. This is a fair point about discipline, wrapped in the same Japanese-trader reverence as everything else. He also flags that the system is for intraday and very short-term traders only, holding nothing beyond two or three days.

Key Takeaways

Renko brick: a Renko chart draws a new box only when price moves a fixed distance, ignoring time entirely. Green brick = price rose by the brick amount; red = it fell by it. The result is a clean trend staircase with the small noise filtered out.
The core claim: brick size is supposedly 80% of trading success. Everything else (entry, exit, stops) is secondary.
His brick-size formula: ATR-14 of your chosen chart, halved. Switch the chart’s box-size setting from “ATR” to “traditional” and type in that number.
Basic signal: buy the first green brick, hold to the first red brick, then exit and reverse. Two colours, two actions.
Stop-loss: start at the base of the prior red brick; revise up once when the third green brick forms; then hold.
Refresh cadence: recompute the brick size every seventh period because ATR drifts with volatility.
Time-frame selection: choose it by your acceptable loss per trade — find the time frame whose ATR-14 matches that loss.
Scope: marketed for intraday and 2-to-3-day traders; he claims a ~87% win rate (92%+ on Bitcoin/forex), with no evidence shown.

Claude’s Take

This is a trading-guru video, with all the tells. The headline numbers — 87% success, 92% on Bitcoin — arrive with zero backtest, zero trade log, zero account statement. The man even admits backtesting is “very hard” because the brick keeps changing, which is a convenient way of saying the strategy can’t be verified. He then asks you to paper-trade it for six or seven months and discover the magic yourself. That’s not evidence; that’s homework that conveniently can’t disprove him.

The “lost Japanese secret destroyed in World War Two” narrative is pure costume. Renko is a real, legitimate charting style, and the underlying observation — filtering noise to see trend more clearly — is sound. But there is no documented 1830s formula, and the appeal to ancient discipline is salesmanship. Notice also the structural problem nobody mentions: Renko bricks only complete in hindsight, so a chart always looks cleaner after the fact than it traded in real time. Strategies that look 87% accurate on a finished Renko chart routinely fall apart live, because you’re often acting on the brick that’s still forming — which he waves away by telling you to “ignore the information bricks.”

What’s actually useful here is small but real: the definition of a Renko brick is explained clearly, halving ATR is a reasonable enough default for box size, and the “size your stop to your risk tolerance, then pick the time frame to match” logic is a genuinely good reframe. Everything else is repetition and mystique. Four out of ten — one clear concept and one decent tip, buried under unverifiable win-rate claims and war-lost-secret theatre.