Renko chart

A Renko chart is a style of charting that plots price movement using a series of uniformly sized bricks, ignoring the passage of time entirely, in order to filter out minor price noise and highlight the underlying trend more clearly. The name comes from the Japanese word for bricks, and like point and figure charting, it belongs to a family of charting methods built around fixed price increments rather than fixed time intervals.

A new brick is only added to a Renko chart once the price moves by a predetermined amount, called the brick size, in either direction. A brick is drawn at an angle up from the previous one if the price has risen by that amount, and at an angle down if it has fallen by that amount. Small, back-and-forth price fluctuations that never reach the full brick size simply produce no new bricks at all, meaning a stock trading sideways for days can appear as an empty stretch with no new marks, while a fast, sustained move produces a rapid string of bricks in the same direction.

Because time is removed from the equation, a Renko chart can make a trend look far smoother and cleaner than a standard candlestick chart of the same stock, since the daily wiggles that create so much visual clutter simply do not generate new bricks. This makes it popular with trend-following traders who want to filter out short-term noise and focus purely on the direction of larger moves, though the tradeoff is that a Renko chart loses information about exactly when and how quickly a move happened, and choosing too small or too large a brick size can distort the picture in either direction.