UPPER INDICATORS & SETTINGS:
- Price Channel (0, 3) standard ToS study
- As Good As It Gets (2.0, yes) found on this forum
- TTM_Alert_Pivot_Point_Mobius (8, yes, yes) found on this forum
LOWER INDICATORS & SETTINGS:
- Matrix (5, 50, 100, 16, 200, -200, no, no, yes) found on this forum
- MACD (13, 21, 8, Exponential, no) modified from one found on this forum
FOREWORD: I have been told by a vast number of people that these indicators will NOT work with Renko because the indicators are "time-based," whereas Renko is based solely on Price Action. I would like to dispel that myth. If these indicators were "time-based," they would continue to print new information regardless of what the Renko brick does. In other words, even if a Renko chart didn't print a single brick all day, "time-based" indicators should be printing the information that corresponds with a given time frame. As you'll notice in the image shared, the "time-based" indicators remain aligned with the position of the "price action only" Renko bricks. What this means, to me anyway, is that logic dictates these indicators are providing relevant information that can be used to make a decision/confirmation on proof of concept. I took 2 different trades this morning based on my interpretation of Renko and these "time-based" indicators so that I could demonstrate what I mean.
STRATEGY:
ENTRY SIGNALS:
- LONG Alert Signal Fires
- Price Action Breaks Upper Price Channel (the Green Line)
- Corresponding Matrix Bar Is Green
- MACD White MA Crossing/Above Magenta MA
- Take A Position With A .10 Cent Stop Loss & Either A .30 or .50 Cent Profit Target (this is determined by the pivot lines)
EXIT on Stop Out or Profit Target (as mentioned previously, I'm scalping; I'm looking for the quick in and out with PROFIT. That said, once the profit window reaches .15 cents, I bring the S/L up to break even, when it reaches .25 cents, I lock in the .15 cent move by raising my S/L; at this point, it's either going to run up and cash me out at my .30 cent limit order or it's going to fall and I'm going to take the .15 cents a share move and look for a re-entry or a different instrument. I do the same with a .50 cent profit target). I'm using this to build a small account, but it can also be used to increase large accounts simply by buying more shares.
IMAGE EXPLANATION:
Just prior to Market Open we had a LONG Alert Signal @ approximately $4.95 that aligned with a Red Matrix Bar & an upside down MACD, as well as a pivot point at around the $5.30 in the pre-market. As Price Action moved above the $5.30 mark, you notice that the Matrix is Green and near overbought (without this "time-based" indicator in place, all you'd have to go on is a pre-market high of $5.55 that was achieved without volume; that's what the dull grey Renkos indicate). I took a small position of 50 shares to prove my concept (my indicators told me this was a BAD entry, but without these indicators I would've been left guessing or waiting to see if Price Action blew through the pre-market high before taking a position and even then, I would've been rolling blank dice and hoping for the best). As we can see, Price Action fell just short of the $5.55 mark before dropping like a falling knife to a new low.
Once the instrument bottoms out, we get another LONG Alert Signal, which immediately aligns with a corresponding Green Matrix brick, it's followed by a break of the upper Price Channel; the 2nd Renko brick above the Price Channel is where the MACD begins it's crossover. I took a larger position based on the indicators and entered with a .30/.10 bracket (I chose the .30/.10 bracket because the pre-market pivot point at $4.85 told me there was a better shot at grabbing .30 than there was of grabbing .50) that said, it did run up to .50, but as you can see, when it triggered my .30 limit profit target, the Matrix and the MACD were both nearing their respective overbought zones and shortly after eclipsing the .50 mark it retreated. Again, I'm using this as a scalping strategy to build a small account, but I also intend to use it once the account has grown; instead of 100 share lots, I'll start taking 200/250 share lots, then 500 share lots, etc.
An alternate exit strategy for this setup would be to ENTER based on the criteria above, yet only using a .10 S/L with no profit target set and then adjusting the S/L based on personal risk assessment until Price Action breaks back through the lower Price Channel Red Line. Give it a go and let me know what you think! Good Luck!
DISCLAIMER: This is not financial advice, perform your own due diligence and use at your discretion!
