Sunday, June 29, 2008 2:41:34 PM
If the initial trend paints a new red brick, moves to within a hair (say 95%)of painting the next red brick, then reverses, price can move almost]/b] 3 bricks to paint the new white reversal brick.
I have been studying the renkos all week, and I believe that I am right. Trying to guess profits and loss' from looking at daily renkos appears to be rather hard also. It appears that one assumes to catch the turns, when the daily can paint several new boxes at the update, which would preclude one to make a trade at the turning point (middle of that string of new boxes).
It's the same effect as having stops hit by gap openings and then returning back close to filling the gap, or actually filling the gap.
I recognize that while watching intraday, renkos can paint and then remove boxes at the close of the period. It seems that there are two major factors clouding the usefulness of the renko.
1) intraday is more errattic (painting/unpainting boxes)
2) daily can paint many boxes at once - that gap effect
I am fascinated by the renkos, but cannot quite come to grips with these situations that I have mentioned.
I hope someone here can explain it better, or show me that I am looking at it incorrectly!!
I have been burnt many times by thinking I understood forms of t/a, and even trading practices/rules of the brokers.
tia,
bobjack
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