Renko

A Renko chart is constructed entirely from price movement rather than time. Instead of plotting a new candle every minute or every day, a Renko chart adds a new “brick” only once price moves by a predefined amount, called the box size or brick size. If Nifty moves up by the chosen box size, a green brick prints; if it reverses by that same amount (or sometimes a multiple of it, depending on the reversal setting), a red brick prints in the opposite direction. Time is not represented on the x-axis at all, a period of dead, sideways trading produces no new bricks whatsoever, however long it lasts.

This makes Renko fundamentally different from every time-based chart, including Heikin Ashi, which still updates a candle every period even when price barely moves. For an F&O trader, the appeal is that Renko strips out the small, directionless noise that fills up a normal 1-minute or 5-minute Nifty or Bank Nifty chart during low-volatility stretches, leaving only genuine directional moves visible. This can make trend identification cleaner during a strong intraday move, since consecutive same-colour bricks represent sustained movement in one direction with the noise filtered out by construction.

The trade-off is that Renko charts discard information that options traders often need, there is no way to tell from the chart alone how long a brick took to form, so a brick built over two minutes of a sharp move looks identical to one built over two hours of a slow drift. Choosing the box size is also a judgment call: too small and the chart still whipsaws on minor noise; too large and it reacts too slowly to genuine reversals, which is a real risk given how fast options premiums decay and move.

Because Renko sacrifices timing precision, many traders use it only as a secondary trend filter alongside time-based tools. Confirming a Renko brick reversal against VWAP or a Supertrend signal on a regular candlestick chart is a common way to avoid acting on a Renko signal that formed too slowly to be tradable in a fast-moving options market.