Difference between Renko bars v/s UniRenko bars – NinjaTrader 8 Charts

What is a Renko chart?

Investopedia says, “A Renko chart is a type of chart, developed by the Japanese, that is built using price movement rather than both price and standardized time intervals like most charts are. It is thought to be named after the Japanese word for bricks, “renga,” since the chart looks like a series of bricks. A new brick is created when the price moves a specified price amount, and each block is positioned at a 45-degree angle (up or down) to the prior brick. An up brick is typically colored white or green, while a down brick is typically colored black or red”.

UniRenko on the other hand, I would like to call a better version of Renko charts.

First, let’s see what each Renko and UniRenko has to offer to the traders

Renko

Renko comes as an inbuilt chart type in NT8 . Renko is plotted only with respect to price and is not dependent on time whatsoever.

For setting up Renko chart you need to give one parameter called Range or Brick Size or Box Size. Suppose we have set the parameter to be 10 for NIFTY and we want to plot Renko chart for NIFTY, also NIFTY is trading at 11900 and the current bar is a green bar, now unless NIFTY moves 10 points above to 11910, there would be no new bar formed. It does not matter how much time NIFTY spent from 11900 to 11910. Only when NIFTY moves 10 points i.e. range value, the new bar will be formed. For red bar to be formed immediately after the green bar, price has to move twice the parameter value i.e. 20 points down the last green bar high. So, until NIFTY moves to 11910, no green bar would be formed and until it moves to 11880 no red bar will be formed. If NIFTY moved between 11881 and 11909 for the entire day, there would be no new candle formed on the Renko chart for the day.

UniRenko

UniRenko bars by default are not included with NT8, you need to import it into NT8. The plotting mechanism is similar to Renko bars. The difference is, unlike Renko which takes only one parameter, UniRenko takes 3 parameters to plot the chart. These parameters are Tick Trend, Open Offset and Tick Reversal.

In case of UniRenko chart, when the new bar is formed, the open of that bar is Open Offset points below the previous bar high in case of green bar and Open Offset points below in case of red bar. Which means the open of bars in UniRenko charts is a derived value and not actual open of the bar.

As Renko bars, the difference between consecutive highs in case of green bars is the same as the difference between two consecutive UniRenko bars of the same brick size. In case of reversal in UniRenko bars, the value specified in Tick Reversal is the value price has to move from the open of the most recent bar to form a reversal candle. The default or standard value for tick reversal is 4 times your brick size. In our case, our brick size is 100 (Note: the value you put here is multiplied by a minimum tick size of the underlying instrument which in our case is 0.05) which is 100*0.05 = 5 points.

Assume that the latest bar formed is green bar and the price is 11900. Now unless the price moves by 5 points higher, no new green bar would be formed and unless the price moves by 20 points (Tick reversal = 400 = 400*0.05 = 20 points) below from the current price, no new red bar would be formed.

Steps to Install Unirenko in Ninjatrader 8

1)Download UniRenko for NT8.
2)Open Ninjatrader 8 and go to “Control Center” in NT8, click on “Tools” menu.
3)Now click on “import” and select the downloaded zip file and press OK.

Note : While importing just remember not to extract the file, import as a zip file.

Comparison

1. UniRenko chart looks visually appealing than Renko chart
2. UniRenko chart has more customizability than Renko chart which would help in manipulating the basic advantage of Renko charts which is a sole dependency on price, to preform and implement complex strategies on price.
3. UniRenko chart has tails as they show wicks of the candles, unlike Renko chart where we only see high and low or price range to be precise.
4. One of the major advantages of the UniRenko chart is even being only price dependent, it shows gaps in the price that occur between trading sessions. This feature gives UniRenko a significant edge over Renko charts because in most of the analysis platforms Renko charts don’t show gaps.

Final Thoughts

Traders use Renko to reduce noise from the price movement which you otherwise get in a traditional candlestick chart. Renko charts visually a clear direction of the trend, key support & resistance level and failed breakouts. UniRenko does all that and some more. UniRenko is the clear winner here with a significant edge over Renko.

Happy Trading!