Do the Renko Charts function properly?

[BillR]

I subscribed to eSignal in an effort to move away from Tradestation's lack of attention to Renko charting. I am getting a sense that it is a backward move. I tried emailing tech 'support' but the response was simply "you can't backtest renko". No explanation.

I will try here: If you set up a renko chart and use any compression setting (interval) other than 1 tick, there is a chance of getting more than one brick formed at a time. In reviewing the forum, I understand this causes the efs file to stop working correctly. Is this true? Does the renko chart 'break' the efs formula? What about simple indicators like MA's?

Also, backtesting in renko requires a knowledge of how renko's work. If you have the chance of multiple bricks being formed from the use of time intervals, then you need to take that into account as the backtesting my show a trade on the first of three trending bricks and give you an artificially optimistic trade. But that is something that can be managed. I want to know if the problems with renko are more fundamental (i.e. the computing code doesn't work and provides false results). If that is the case, why does eSignal even offer renko? A broken tool is more costly than no tools!!

Tradestation doesn't get it (or care) and I am trying to find out if eSignal has also just included renko as a marketing gadget without regard to whether or not it works.

Thanks.

[SteveH]

Hey, this Renko script price overlay provided in the Files Section is pretty cool:

http://share.esignal.com/groupcontents.jsp?folder=Renko%20Chart&groupid=114

You could use this script in conjunction with eSignal's backtesting capabilities and get a good fix on whether your method of trading it would be profitable...that, and modify it however you like to fit your specific needs.

[Guest]

Hi BillR,

Based on my experience, Renko charts can be used and back-tested. There are several issues regarding Renko charts, some of which you have discussed, like understanding how the historical bars are loaded. Here are some considerations:

Renko Chart
Backtesting a Renko chart can be difficult, but can be done. Here is a link that discusses how you must approach backtesting a Renko Chart.

Multiple Intervals/Renko/Tick/Other
If you are using multiple intervals in your backtest, it can be even more difficult to backtest an external interval that is tick based or otherwise shorter in terms of the chart interval. The decisions or trade signals cannot be based on the shorter external interval since multiple bars are being calculated every historical bar.

Here is a link that describes the subject.

You need to understand how the values are made available historically. There are ways to figure out the values of a shorter external interval. Example efs's using an external interval obtained using the efsInternal() function are in this link and this link.

There used to be an issue with the indicators "drifting" due to the multiple bars being drawn concurrently. As I remember this was resolved.

Hope this helps answer some of your questions.

Steve

Originally posted by BillR
I subscribed to eSignal in an effort to move away from Tradestation's lack of attention to Renko charting. I am getting a sense that it is a backward move. I tried emailing tech 'support' but the response was simply "you can't backtest renko". No explanation.

I will try here: If you set up a renko chart and use any compression setting (interval) other than 1 tick, there is a chance of getting more than one brick formed at a time. In reviewing the forum, I understand this causes the efs file to stop working correctly. Is this true? Does the renko chart 'break' the efs formula? What about simple indicators like MA's?

Also, backtesting in renko requires a knowledge of how renko's work. If you have the chance of multiple bricks being formed from the use of time intervals, then you need to take that into account as the backtesting my show a trade on the first of three trending bricks and give you an artificially optimistic trade. But that is something that can be managed. I want to know if the problems with renko are more fundamental (i.e. the computing code doesn't work and provides false results). If that is the case, why does eSignal even offer renko? A broken tool is more costly than no tools!!

Tradestation doesn't get it (or care) and I am trying to find out if eSignal has also just included renko as a marketing gadget without regard to whether or not it works.

Thanks.