Renko Brick Size Calculator
Calculate optimal Renko brick size using ATR for noise-free trend following charts. Enter values for instant results with step-by-step formulas.
Reviewed for accuracy by Daniel Agrici, Founder & Lead Developer
Renko Brick Size Calculator
Calculator
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Formula: Brick Size = ATR(n) x Multiplier
Worked example — Optimal Brick: 4.25 (1x ATR) | 6.375 (1.5x) | 8.50 (2x) | Choose based on trading style
Formula
Brick Size = ATR(n) x Multiplier
Where ATR(n) is the Average True Range over n periods (typically 14), and the Multiplier (typically 1.0) scales the brick size. A new Renko brick is drawn only when price moves by the full brick size in one direction, filtering out noise and creating clear trend patterns.
Worked Examples
Example 1: ATR-Based Renko Brick Size
Problem:A stock trading at $158 has a 14-period ATR of 4.25. Calculate the optimal brick size using 1x, 1.5x, and 2x ATR multipliers.
Solution:ATR = 4.25 1x ATR Brick = 4.25 x 1.0 = 4.25 (2.69% of price) 1.5x ATR Brick = 4.25 x 1.5 = 6.375 (4.03% of price) 2x ATR Brick = 4.25 x 2.0 = 8.50 (5.38% of price) Interpretation: 1x: Standard sensitivity, suitable for swing trading 1.5x: Reduced noise, fewer bricks, longer-term trends 2x: Aggressive filtering, position trading only
Result:Optimal Brick: 4.25 (1x ATR) | 6.375 (1.5x) | 8.50 (2x) | Choose based on trading style
Example 2: Next Brick Price Levels
Problem:Current Renko brick base is at 156.00 with a brick size of 4.25. Current price is 158.50. Calculate the price levels for the next bullish and bearish bricks.
Solution:Current brick base = 156.00 Brick size = 4.25 Next bullish brick forms at: 156.00 + 4.25 = 160.25 Next bearish brick forms at: 156.00 - 4.25 = 151.75 Current price (158.50) to next bull brick: 160.25 - 158.50 = 1.75 points needed Current price to next bear brick: 158.50 - 151.75 = 6.75 points needed Price is closer to forming a bullish brick
Result:Next Bull Brick: 160.25 (1.75 away) | Next Bear Brick: 151.75 (6.75 away) | Bullish bias
Frequently Asked Questions
What is a Renko chart and how does it work?
Renko charts are a type of price chart that uses fixed-size bricks (or blocks) to represent price movement, ignoring time and volume entirely. A new brick is only added when price moves by a predetermined amount (the brick size) in one direction. Bullish (up) bricks are drawn when price rises by the brick size, and bearish (down) bricks are drawn when price falls by the brick size. Because bricks only form when a meaningful price move occurs, Renko charts filter out market noise and create clean, easy-to-read trend patterns. The name Renko comes from the Japanese word renga meaning brick. Unlike traditional candlestick charts where a new candle forms at each time interval regardless of price movement, Renko charts are purely price-driven.
How do you determine the optimal Renko brick size?
The most reliable method for determining optimal Renko brick size uses the Average True Range (ATR), which adapts the brick size to the current volatility of the instrument. The standard approach is to set the brick size equal to the 14-period ATR, which ensures each brick represents one unit of typical volatility. For smoother charts with fewer bricks and less noise, use a larger multiplier like 1.5x or 2x ATR. For more responsive charts with more bricks, use 0.5x ATR. Alternatively, some traders use a fixed percentage of price (commonly 1% or 0.5%) for consistent relative sizing across different price levels. The key is that the brick size should be large enough to filter noise but small enough to capture meaningful trends without excessive lag.
Why is ATR-based brick sizing better than fixed brick sizes?
ATR-based brick sizing dynamically adjusts to the current volatility of the instrument, while fixed brick sizes remain static regardless of market conditions. During high-volatility periods, ATR increases and produces larger bricks that prevent the chart from generating too many bricks from noise. During low-volatility periods, ATR decreases and produces smaller bricks that keep the chart responsive to genuine price movements. A fixed brick size that works well in low volatility may generate excessive noise in high volatility, and one that works in high volatility may be too large to capture moves in calm markets. ATR-based sizing also normalizes across different instruments, so a Renko chart of a $10 stock and a $500 stock will have proportionally appropriate brick sizes. This adaptability makes ATR the preferred method for professional traders.
How do you trade Renko chart breakouts?
Renko breakout trading capitalizes on the clean trend signals these charts provide. A bullish breakout is identified when price forms a new up brick after a series of down bricks or consolidation, signaling that buying pressure has overcome the brick size threshold. Enter long on the close of the first new up brick, with a stop loss placed one to two bricks below entry. A bearish breakout is signaled by a new down brick after up bricks or consolidation. The simplest strategy is to stay long while up bricks continue forming and reverse to short when a down brick appears. More conservative traders wait for two or three consecutive bricks in the new direction before entering. Support and resistance levels are easily identified as price levels where brick direction has reversed multiple times.
What are the advantages of Renko charts over candlestick charts?
Renko charts offer several distinct advantages over traditional candlestick charts. The elimination of time-based intervals removes the noise created by periods of low activity where candles form with minimal price movement. Trend identification becomes straightforward since trends appear as sequences of same-colored bricks without the confusing wicks and shadows of candlesticks. Support and resistance levels are clearly visible as horizontal price levels where brick direction changes. The fixed brick size creates uniform risk parameters, as each brick reversal represents a known price movement. Renko charts eliminate the emotional impact of large volatile candles that can cause panic selling or FOMO buying. They also simplify backtesting and mechanical trading system development because signals are binary and unambiguous.
What are the limitations of Renko charts?
The primary limitation of Renko charts is the loss of time and volume information, since bricks only form when price moves by the brick size regardless of how long it takes. This means you cannot determine how long a trend lasted in calendar time or whether price moves were accompanied by significant volume. Renko charts also introduce inherent lag because price must move by the full brick size before a new brick appears, potentially causing late entries and exits compared to candlestick-based signals. The lack of wicks or shadows means you lose information about intraperiod price extremes. Choosing the wrong brick size can make charts either too noisy (brick size too small) or too smooth (brick size too large), filtering out profitable moves. Gap information is also lost, which can be important for certain trading strategies.
How does the ATR multiplier affect Renko chart behavior?
The ATR multiplier directly controls the sensitivity and smoothness of the Renko chart by scaling the brick size relative to the average volatility. A 0.5x multiplier creates bricks half the size of the ATR, resulting in more bricks, more responsive trend detection, but also more false reversal signals from market noise. A 1x multiplier (standard) produces bricks equal to one ATR, providing a good balance between responsiveness and noise filtering for most trading styles. A 1.5x to 2x multiplier creates larger bricks that only form on significant moves, ideal for longer-term trend following with fewer but higher-quality signals. Day traders often use 0.5x to 1x multipliers for quicker signals, while swing traders prefer 1x to 2x. The optimal multiplier depends on your trading timeframe, the instrument volatility, and your risk tolerance.
Can Renko charts be combined with technical indicators?
Yes, Renko charts work effectively with many technical indicators, though some adaptations may be needed since the time axis is non-uniform. Moving averages applied to Renko close prices create very smooth trend lines that are less prone to whipsaws than on regular charts. RSI and Stochastic oscillators provide useful overbought and oversold signals on Renko charts, with divergences being particularly meaningful. Volume indicators can still be plotted on Renko charts by assigning the cumulative volume between bricks to each new brick. Bollinger Bands applied to Renko charts create very clean channel indicators. The ADX works well for confirming trend strength. However, time-based indicators like VWAP are less meaningful on Renko charts since the time axis is compressed. Support and resistance from standard charts remain valid reference points.
What is the difference between Renko and Heikin Ashi charts?
While both Renko and Heikin Ashi charts aim to smooth price action for clearer trend visualization, they achieve this through fundamentally different methods. Renko charts use fixed-size bricks based on price movement only, completely ignoring time, and each brick is a uniform size. Heikin Ashi modifies the OHLC values of regular time-based candles using averaging formulas, retaining the time axis. Renko charts can have multiple bricks form in a single time period or go many periods without a new brick, while Heikin Ashi always produces exactly one candle per time period. Renko is more aggressive in noise reduction because small price movements within the brick size are completely ignored. Heikin Ashi retains more detail through its wick shadows. Renko is better for pure trend following, while Heikin Ashi works better when you need to maintain time context.
How do you set stop losses and take profits with Renko charts?
Renko charts provide naturally structured stop loss and take profit levels based on the brick size. The simplest stop loss approach is to exit when the first opposing brick forms, which represents a reversal of one brick size. For a wider stop that allows more room, place the stop loss two bricks away from entry, meaning you would tolerate one opposing brick before exiting on the second. Take profit targets can be set as a multiple of the brick size, such as targeting 3 bricks of profit for every 1 brick of risk (3:1 reward-to-risk ratio). Trailing stops work exceptionally well with Renko charts by moving the stop to one brick below the latest up brick in a long trade. Since each brick represents a known price movement, position sizing is straightforward: divide your risk capital by the brick size multiplied by the number of bricks for your stop distance.
References
Reviewed for accuracy by Daniel Agrici, Founder & Lead Developer · Editorial policy
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