Renko chart
A chart built from fixed-size price "bricks" instead of time intervals, used to filter out minor price noise and make the underlying trend easier to read.
In plain language
A time-based chart prints a new bar or candle every period, whether or not the price did anything worth noticing. A Renko chart only adds a new mark once the price has genuinely moved a set amount.
That single design choice is what makes it good at smoothing out the small, meaningless wiggles that can obscure a clear trend on an ordinary chart.
How it works
The workbook: a Renko chart "uses fixed price movements (bricks) rather than time intervals. It is best suited for getting clarity on trends and in momentum tracking. It smoothens out minor fluctuations and is good for trailing stop strategies."
Chapter 15.2.5 sits it alongside Point and Figure charts as the workbook's 2 time-free chart types — both remove time from the picture, but Renko uses price bricks rather than X and O columns.
A worked example
Illustrative — a general Renko convention, not detailed by the workbook. Using a fixed Rs 2 brick size, price has to move a full Rs 2 in one direction before a new brick is added. A stock oscillating between Rs 100 and Rs 101.50 all day, across dozens of trades, would show no new bricks at all — filtering out exactly the "minor fluctuations" the workbook describes, which is why the chart type suits a trailing-stop strategy that should only react to a genuine move.
Why NISM asks about it
Chapter 15.2.5 (Renko Chart) sets this out alongside Point and Figure and Heikin-Ashi charts in the same section. Expect a question distinguishing what Renko charts are best suited for compared with the workbook's other chart types.
Common exam traps
- Renko removes time, the same as Point and Figure, but the two are not the same chart type. Renko uses fixed price bricks; Point and Figure uses X and O columns. The workbook lists them as separate chart types, each best suited to slightly different uses.
Where this is taught
Free preparation for NISM Series XVRelated terms
- Bar chartA technical-analysis chart showing each period's Open, High, Low and Close as a single vertical bar with side ticks — used to study price range and volatility.
- Moving averageThe average price of a share over a rolling window, recalculated each session — it smooths away daily noise so that the underlying trend, and changes in it, become visible.
- Point and Figure chartA chart that plots only price movement using columns of X and O marks, ignoring both time and volume entirely — used to filter noise and spot breakout, support and resistance levels.
- Line chartThe simplest price chart: a single continuous line joining closing prices over time, good for reading a trend quickly but blind to the open, high and low.
- Heikin-Ashi chartA chart of adjusted candlesticks that average price data to reduce noise, giving a clearer view of the trend and helping a trader stay in a position through whipsaws.