How do Renko Charts Work?

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Renko charts are designed to filter out noise and focus solely on price movement, rather than time.

Instead of plotting a bar at the end of every time interval, they form “bricks” only when the price has moved a set amount in either direction. This approach means the chart reflects significant price changes, making trends easier to spot while ignoring minor fluctuations.

Each brick is created based on a fixed price movement, for example, 10 points. A brick will only appear once the price has moved beyond that set amount from the close of the previous brick. These bricks are colour coded to show direction, often green for bullish and red for bearish moves. Because they are price-based, several bricks can form in a short period during volatile conditions, or none may form for hours if the market remains in a tight range.

It is important to understand that Renko bricks are synthetic. The open and close prices shown on each brick are not the actual traded prices at a specific time, but are calculated based on the brick size and the previous brick’s close. TradingView explains that this design is intentional, but it means that Renko charts should not be relied upon for pinpoint historical price accuracy.

On TradingView, Renko charts are generated using available historical data. If lower-timeframe data is missing, higher-timeframe data is used instead, which can cause the historical bricks to be recalculated. As confirmed by TradingView, this recalculation can alter how past charts appear, particularly when zooming out or refreshing data.

Because Renko charts are synthetic and subject to recalculation, TradingView specifically advises caution when using them for backtesting. Historical performance can change when market data is updated, meaning that real-time forward testing is the only reliable way to evaluate a strategy using Renko charts.

How do I backtest on Renko?