As many good traders know, it is important to view a potential swing or
position trade on various time-frames. Say for example you're trading
daily charts. It's worth your time to look at the weekly charts for more
languid price patterns that may offer tradeable psychological break
points. Or if you're swing trading 60-minute charts, looking at the
dailies for possible nearby support and resistance or Fibonacci levels
would be helpful for stop loss placement so you don't get whacked.

It
can be equally helpful to view markets through different types of
charts. You don't want to over analyze the markets (paralysis by
analysis), but what you don't see with a chart filled with high, low,
open, close, time and volume data you might see if you eliminate a few
of those factors.

(Click on images to make larger)

Renko
charts are a Japanese style of charting that focuses solely on price
moment while ignoring the passage of time and volume. They fall into the
same category as Point and Figure, Kagi and Three Line Break charts.
Renko charts have been around for quite awhile, but only gained traction
as a charting style in Western stock markets after being introduced by
Steve Nison through his book Beyond Candlesticks. As with the other
charting styles listed above, Renko charts are a trading system and
charting style all in one.

How Renko charts are constructed is
actually quite simple. From a StockCharts.com article:

Renko
charts have a pre-determined "Brick Size" that is used to determine
when new bricks are added to the chart. If prices move more than the
Brick Size above the top (or below thebottom) of the last brick on the
chart, a new brick is added in the next chart column. Hollow bricks are
added if prices are rising. Black
bricks are added if prices are
falling. Only one type of brick can be added per time period. Bricks are
always with their corners and no more than one brick may occupy each
chart column.

By ignoring the passage of
time and volume data, Renko charts can effectively filter out noisy
markets giving you a cleaner look at support and resistance levels,
potential bottoming and topping patters and prevailing trends. By
nature, they are trending charts just the same way Point & Figure,
Three Line Break and Kagi charts are and thus, make excellent charts of
filtering market noise.

Filtering
Noise

Renko charts are completely trade worthy in
themselves, but I find many traders are uncomfortable (re:wussies)
trading without time and volume data. In that case, Renko charts can be
used as a way to filter minor market noise. Let's take a look at a
60-minute Renko chart of the Biotech ETF (IBB).

The first thing you'll notice
with this chart as well as the other two examples is just how clean the
charts are. Price is your primary focus and it's right up front. Renko
charts force you to keep your analysis simple.

You can clearly
see the trends, the support & resistance levels and key reversal
points. Once (IBB) was able to clear the descending overhead resistance
around 85.50, the trend took hold for a good 5 to 8 bucks before a
significant pullback into consolidation which is taking on the
appearance of a large descending triangle in a strong uptrend.

How
is this useful to your trading? By stripping out some of the sideways
chop, Renko charts simply focus you on levels that become obvious
psychological points of contention within the market. This gives you an
advantage for placing stop losses or spying breakout/down areas. With
Renko charts you're able to draw out cleaner, more visible support &
resistance levels that give you an edge over other traders who might
not see them through the clutter of bar or candlestick charts.

There's
no guess work involved when using Renko charts as you're not concerned
with the minor price fluctuations…just the results of price follow
through and resolution.

Would I use the Renko chart of (IBB) on
it's own? Not in this example, no. I'd trade off it if that's where the
trade began, but that's another blog post entirely.

I would,
however, use this as one type of view of (IBB) if I were already swing
trading it off time-based bar or candlestick charts.  Because Renko
charts lack visible evidence of gaps, and some gaps are important bits
of information, in this form, a Renko chart is just one part of the
nightly analysis.

I didn't hit on every aspect of Renko charting
and didn't get into trading with Renko charts, so if you have an further
questions, hit me up in the comment section. Good luck and good
trading. Cheers.

Jack Damn
=^.^=

My Dad (jerk or not) was right about messing around with penny stocks, just look at CPE on Tuesday (even though it hit over $8, I still consider it a penny stock). I wish he would have taught me about risk management before he left. I had to learn that on my own, and it was expensive.

CPE started out today another 9-10% up then quickly dropped 30%, punishing those who went long this morning and the past couple of days. Now again; I don't really fool around with penny stocks much. If I have a $10,000 trading account (I'm no millionaire like lots of folks here), I would never use more than one tenth of it on these types of stocks. So I might take $1000 and split it up into 3 or 4 different positions.

Before buying any, I would make sure they are in some sort of recognizable pattern, look for a good entry and realize that all of these could drop drastically. Emotionally, I prepare myself that these could all end up worthless so if they do have a huge drop, I will not panic and sell right away. I measure my risk before I buy, and am ready to lose whatever I risk before I buy. I also don't set stops initially since they could go down 10-20% or more then up 10-20% in a matter of minutes, and I never double down or add to a loser.

CPE worked out well, I bought 178 shares @ 1.40 = $249. I was able to sell half of the original position at $4.00 x 89 = $356. I am already in the green even if my remaining shares plummet; I see them as free shares now since I made my money back and then some. I did set stops after I sold half though, they are very loose since this is "buy and hold" for me, and they were not hit with today’s crazy price action (another day like today and they probably will be though). If my stops are soon hit, I will still pocket close to another $512. Gaining a total of $356 – (249 (original investment)) + 512 = $619.

Even if my two or three other risky penny stock positions end up worthless; this one will almost cover all of them. If the other two work out well, I might be able to purchase my Fiero. I saw several nice ones for sale in New Jersey. I will then be able to drive it out to Vegas for slopefest. You can call me "The Fiero Guy", and I will take you all out for personal tours in my new ride.

Leisa, you can have the first ride!

Editor's note:  I will be looking for you to pull up in this one

 Once you’ve found the best forex broker for you and had some time to learn the market, it’s too easy to stagnate—not that traders stop wanting to succeed. Every person in the forex market wants to do a little better and increase his profits. But some traders can fail to push themselves towards better understanding and improved strategies. Once you find a method that works, it is simply too easy to be satisfied with past successes and stagnate. This is natural, since we all have a preference for what we already understand and feel uncomfortable with things we haven’t tried.

Not only does this ignore new opportunities for bigger profits, but it is also the surest way to lose the success you already enjoy. The problem is that the market itself never stays stagnant. It has hardly been 10 years since online forex trading began, but huge changes have come about during that short time and the market only continues to develop. As trading becomes increasingly sophisticated, there are no guarantee that your current method will continue to work.

Even more so, the last few years have seen revolutionary changes in the developed economies. No one ever knows the future with certainty, but there is likely to be significant fallout as the world’s largest economies face their mounting debts. All of that will require new and more innovative trading strategies for success.

So how do you push yourself to progress and stay current in this market? First, identify other areas of forex investment you don’t understand or strategies you haven’t used. Consider making an education schedule of when you will study each new area.

Second, compare notes with other forex investors. This may seem like a purely social endeavor, but it is actually worth money to network with other people and learn what works for them. Consider traveling or telecommunicating on a regular basis in order to meet with successful traders. Start paying attention to some of the most followed currency pairs like the EUR USD chart.

Third, invest in quality forex education. This is another way that comparing notes with others is a good idea—not all courses are worth their price. But if you can find something on your level of experience and knowledge, it will help you think about even familiar concepts in a fresh way.

Fourth, take advantage of the demo accounts that are available for free from most forex brokers. Try a completely different method—without facing any risk of losses. One of the best reasons to do so is the fact that the best strategies are usually a hybrid of several others. Not all market conditions are the same, and one of the strategies usually works best in a given circumstances. If you learn how to trade with multiple methods, you can maximize your profits no matter what is happening.

Fifth, push yourself to investigate exotic currencies and currency pairs. It is quite likely that world currencies may diversify in the near future, with the overwhelmingly majority of trades no longer belonging to the Euro and USD. In the future, successful traders will need to understand and manage many different currencies from developing and developed economies.

So even if you already have multiple years of experience, you will benefit from expanding your knowledge and trying something new. That kind of progress only happens when you step out of your comfort zone and give it a try.

 In a post that will absolutely mark the top for the market,
I have screened for high beta stocks that either just crossed their 13/34 MA
positively or have maintained the 13 over the 34 and is consolidating within a
squeezing Bollinger Band. 

This has been the recipe for breakouts.  I want to share some names with you, enjoy.

Leisa's note:  I’ve
placed these in a FINVIZ
screener for you.