Renko chart

A chart built from equally sized bricks instead of time based bars. A brick size is chosen first, either as a fixed number of points or derived from a volatility measure such as the average true range. A new brick is added only when price has moved beyond the last brick by that amount, and a brick in the opposite direction conventionally requires a move of two brick sizes rather than one, which is what stops the chart alternating on every small oscillation.

What the construction discards is the point of it. Time is discarded, so an hour of dense activity and a quiet afternoon occupy the same horizontal space or none at all. The high and the low reached inside a brick are discarded, since every brick is the same height. Volume is not aligned to anything regular. The chart is therefore a filter applied to price rather than a record of it, and it is chosen by readers who want the filter, not by readers who want the detail.

Two traps are well documented. The brick currently forming is provisional until it prints, so a pattern read live is not always the pattern that ends up on the chart, and a test run over completed history can credit a method with entries it could not have taken at the time. And the brick size is not a neutral setting: doubling it produces a different chart of the same market with different turning points, and a brick size derived from a volatility measure recalculates as that measure changes, which redraws history. Practitioners disagree over whether the construction removes noise or removes information, and the answer depends entirely on the brick size chosen.