Is Trading Renko Reversals Profitable? 1,080 Settings Tested

A Renko chart drops time from the axis. A brick appears when price has moved a fixed distance, and a quiet hour leaves no mark at all. That is what makes the trends look so clean.

It has one setting: the brick height.

Except that choosing the height does not finish the chart. The levels snap to multiples of the brick, and where that ladder of multiples starts is a second choice: one every implementation makes silently. A 20-pip brick has twenty possible grids.

Same 20-pip bricks, same rule, same year of USD/JPY 15-minute bars. Only the grid moved.

the other nine gridsthe grid a chart draws (offset 0)trade counts 1,004–1,057, essentially unchanged

Net pips ran from +221.9 to +3,082.5. Trade counts ran from 1,004 to 1,057 and were essentially unchanged. The same amount of trading, and a 13.9-fold difference in the result.

How a Renko chart is built

Only the close matters.

Say the level sits at 148.00 with a 10-pip brick. A close at or above 148.10 stacks a brick upward and moves the level to 148.10. A close at or below 147.90 stacks one down. A bar that closes at 148.05 draws nothing at all.

Three consequences follow.

The level only lands on the grid

Levels snap to multiples of the brick. With a 10-pip brick they can only be …147.90 / 148.00 / 148.10…

So where does that ladder start? Every 10 pips from 148.00, or every 10 pips from 148.03? Both are a "10-pip brick chart", both are correct, and no charting package I have looked at exposes the choice.

Ten pips means ten possible grids; twenty means twenty. The implementation picks one and never mentions it.

One bar can complete several bricks

If the close is 35 pips from the level, that bar stacks three. The number of bricks does not match the number of bars.

On USD/JPY in 2025 with 10-pip bricks, bars completing two or more bricks numbered 1,189 on 15-minute, 1,260 on hourly and 721 on 4-hour data. By the moment you can see "three bricks in a row", all three may have arrived together.

It does forget its start date, and the cost is measured in price

Heikin Ashi never forgets where it was started: the Heikin Ashi article measures the halving. Renko does forget. The level is an integer address on a grid, so two series that reach the same address agree exactly from that bar onward.

How long that takes depends on the brick, because what is really needed is a distance in price.

Formiq's backtester warms up eight bars per pip of brick (131 bars at 10 pips, 451 at 50) which covers the 95th percentile above.

Renko settings and how to read them

Renko is not a line beside the candles. It replaces them, so nothing is added in a pane below.

What the settings dialog offers

One item is missing from that table: which multiples of the brick the levels land on. No environment offers it as a setting; the implementation picks one silently. That is what this article is about, and Formiq's backtester is the only place here that lets you type it, as a grid offset, defaulting to 0 pips.

What appears on screen

Bricks stack vertically and change colour with direction. Quiet stretches add no bricks, so a span of clock time can leave a gap with nothing drawn in it. No level lines are added.

How it is usually traded

The most widely published rule is follow the direction when a brick changes direction. This article measures that as the brick flip.

The other common one is wait for N bricks in the same direction before trading, so a single counter-brick does not turn the position. This article measures waits of two to five bricks.

The test separates trading the first change in brick direction from waiting for two to five bricks in the same direction.

Which parameter changes the trade count

A bigger brick trades less and a smaller one trades more. On 15-minute bars a 5-pip brick took 4,841 trades a year and a 50-pip brick took 252. Requiring two bricks to reverse cuts the count to between 43% and 84% on top of that.

One warning about TradingView. Leaving the chart type on Renko while a strategy runs prices the fills at brick values too. The rest of this article is a measurement of exactly that difference.

How this was measured

Measured with Formiq's backtester. Entering the same settings reproduces the same numbers.

Every fill above comes from the candle, not the brick. The second half of the article measures why.

Why the same settings give different results

An invisible grid origin moves them: ten grids at one brick height ran +222 to +3,083 pips. Brick height, reading, year and timeframe all held. Only the grid moves: eighteen cells.

Across all eighteen cells the grid spread ran from 934.2 to 2,860.6 pips. In five of the eighteen, the sign of the year depends on which grid you got. The chart's offset-zero grid produced the smallest annual net in three cells and the largest in one.

The 15-minute 10-pip cell in 2025 is the sharpest: one of the ten grids finished profitable, and it was not the one the chart draws.

Compare the hidden grid offset with the visible brick-height parameter.

Ratios run 0.30 to 1.49, and in 3 of 18 cells the grid mattered more than the brick height did. The setting you cannot reach moves the answer by the same order of magnitude as the setting you can.

Can you just tune the grid?

Not from one year's result. Taking the best offset of 2024 into 2025:

Seven of nine offsets selected from 2024 annual net fell below the 2025 median for the same timeframe and brick height. The grid moves the result substantially, but the prior year's annual net did not select the next year's grid.

There is one practical instruction in this. A single Renko backtest is a point inside a band roughly a thousand to three thousand pips wide. Run several grids and keep what survives all of them; a number from one grid is a number from one grid.

Does Renko really remove time?

It does not. The bricks themselves contain none. But the bricks are built from bar closes, so which bars they were built from stays in the picture.

USD/JPY 2025, the same 10-pip brick throughout.

Identical price action, 2.4 times as many bricks. On 4-hour bars two bars in three complete a brick, so almost no compression is happening; on 15-minute bars three in four draw nothing.

And the share of bricks that reverse is set not by the brick height but by the brick height divided by the typical bar move. Where that column reads 1.65 / 0.82 / 0.41, the reversal rate reads 30.5 / 22.3 / 14.5%. That is the whole reason a small brick looks like a beautiful trend.

Choosing a brick height is choosing a coarseness relative to a timeframe, not escaping one.

Do three bricks mean a trend?

Shuffled price changes made runs just as long. The comparison series is the year's bar-to-bar changes put in a random order. The size of each move, the spread of the big days and the year's total rise are all the market's; only the order they arrive in is destroyed. The same bricks are then built on top.

M15H1H4all fifteen sit on the diagonal (largest gap 2.4 points)

Across three timeframes and five brick heights, the share of bricks pointing the other way from the one before ran 8.5% to 41.6% on the real year and 8.5% to 43.4% on the shuffles. The largest disagreement in any cell is 2.4 points. Mean run length differs by −0.19 to +0.16 bricks, and total brick counts by a factor of 0.96 to 1.014.

A series with its order completely destroyed draws the same picture. The run lengths a Renko chart displays are set by the ratio of brick height to bar move, not by any persistence in price.

The mechanism is in the construction. With the level at 148.00 and price at 148.09, stacking upward needs a close of 148.10 and stacking downward needs 147.90. Continuation is near, reversal is far. That asymmetry manufactures trends out of sequence-free noise.

So is Renko meaningless?

The picture survived shuffling, but the results did not. The same rule was backtested on the shuffled series, ten shuffles averaged per cell.

Across three timeframes, two years and three brick heights (eighteen cells) the real year finished ahead in 17. The shuffled series itself finished profitable in 9 of 18, roughly a coin toss.

Two sentences carry the section. The arrangement of the bricks is not information: shuffling reproduces it. The trading result is: what shuffling destroys is how far price travels between one brick and the next.

Which is another way of saying that what to read is not how many bricks came in a row, but how many pips arrived between them.

Why Renko backtests look profitable

Repricing at the brick level improved all thirty cells. A brick level is a price something genuinely traded at. That is the difference from Heikin Ashi, whose close is an average of four prices and none of them.

It does not help. A brick is only complete when the bar closes, and by then the price has moved past the level.

M15H1H417.3–48.6% of a brick, and favourable in all fifteen

Across three timeframes and five brick heights (fifteen cells) the overshoot lands on the profitable side, without exception. Bricks stack in the direction price moved and stop short of it, so buying there buys below the market and selling there sells above it. One hundred percent of the time.

The same trades, priced both ways. Not one character of the strategy changes.

Across three timeframes, two years and five brick heights (thirty cells) all 30 improved, and 4 turned a losing year into a winning one. The lift per trade ran from 4.26 to 39.28 pips.

It has a closed form. The overshoot is collected once at each end of a trade, so lift per trade = mean overshoot × 2; measured over eighteen cells the ratio came out between 0.908 and 1.024. That is cost = trades × spread with the sign reversed, and it grows with the brick.

Heikin Ashi's close is a price that never existed. Renko's is a price that existed and is gone. Neither is a price you can fill at.

What brick size should you use?

No single height held: the best one changes with the year and the timeframe. Grid unmoved, brick flip, one brick to reverse. Annual net first.

Trade counts for the same settings.

The height with the best annual net was 15 pips on hourly bars in both years, but 30 pips on 15-minute bars in 2025 and 10 pips in 2024. Smaller bricks trade more: 5 pips on 15-minute bars takes 4,841 trades, pays 1,452 pips of spread at 0.3 pips, and finished 2025 at −2,238.4. Widening to 50 pips cuts the year to 112–252 trades, and 4-hour 2024 took 112 of them for −833.0 pips.

Formiq defaults to 10 pips. Reading the brick flip with one brick to reverse, 2025 came to −676.5 pips on 15-minute bars, +2,368.6 on hourly and +1,105.3 on 4-hour. The same brick height changed sign and amount with the timeframe.

The reversal rule was measured too. One brick draws each brick as it arrives; two bricks is the traditional rule MT4 and the textbooks use, where a turn has to give back two bricks before it is drawn.

Across three timeframes, two years and six brick heights (thirty-six cells) the traditional rule finished ahead in 16. A dead heat overall, with a clear split inside it: two bricks to reverse helps small bricks and hurts large ones. It cuts the trade count to between 43% and 84% across those thirty-six cells, which is relief where there was too much trading and starvation where there was already too little.

How many bricks should you wait?

Two was best in three of four rows, and five lost in all three. The other reading waits for N bricks in one direction before trading. Waiting for one is the plain brick flip, so that column matches what was already measured. Annual net on 20-pip bricks with one brick to reverse.

Trade counts for the same settings. Waiting longer trades less.

Annual net was highest at a two-brick wait for M15 2025, M15 2024 and H1 2025, then fell to −2,351.8, −1,837.9 and −1,918.0 pips at five bricks. H1 2024 instead increased through the five-brick setting, so no wait count ranked best in all four rows.

Overall, waiting cost money. The 2025 median annual net for the brick flip was +1,166.0 pips on 15-minute bars, +1,611.5 on hourly and +786.1 on 4-hour; for the waiting reading it was −106.6, +290.6 and −289.3.

Because a single bar can complete several bricks, the wait is counted as "reached N bricks", not "is exactly N bricks". A bar that stacks three at once satisfies a two-brick wait on the way past.

Does last year's best still work?

2024's three winners took 17 to 30 trades and all lost in 2025. Of the 60 settings per timeframe, the best of one year measured in the other.

The three settings selected from 2024 took 17, 27 and 30 trades. All three lost in 2025: −805.8, −499.0 and −790.1 pips. The large 2024 annual nets came from small trade samples and did not continue into the next year.

The four-hour setting selected from 2025 took 364 trades and also made +2,286.6 pips in 2024. Annual net comparisons need the trade count beside them.

Why a sub-40% win rate profited

Wins ran 1.77 times the size of the losses. Averaged over the 2025 settings that took five or more trades.

Every row wins under 40% of its trades. The hourly brick flip is profitable anyway because its +69.0-pip average win is 1.77 times its −38.9-pip average loss. On win rate alone this looks like a losing indicator.

Filters, stops and cost

Built on hourly bars, 20-pip bricks, the brick flip.

ADX lowered the annual net in both years: 2025 fell from +1,310.9 to +834.1 pips at ADX 20 or more, and 2024 from +1,026.0 to −29.8. Restricting the hours did not help either: 2025 came to +636.3 and +371.1 pips, both under the baseline.

Stops and targets raised 2024 (+1,026.0 to +1,569.5 pips) and lowered 2025 (+1,310.9 to +1,006.7). The only variant that improved 2025 was the 24-bar time exit, at +1,947.3 pips, or +636.4 over the baseline: though in 2024 it added only +91.5.

Cost tracked the trade count exactly.

It matches 602 trades times the spread, to the pip. The spread at which the annual net reaches zero was 2.48 pips for the hourly 20-pip flip, 5.87 with two bricks to reverse, 1.67 on 15-minute bars, and 0.24 for the hourly setting that waits three bricks. That last one loses its profit to a quarter-pip of extra spread.

Related reading

• Heikin Ashi settings: the other indicator in this series that rewrites the candles. Its calculated close may never have traded; a Renko close may have traded before the source bar ended. In both cases, filling at the transformed close overstates what could have been executed
• Moving average crossover settings: another trend-following rule, measured with moving-average lines instead of bricks
• Psychological line settings: another indicator on a ladder, where the number you type is not the rule you get
• GMMA settings, where stacking a trend filter on a trend rule made it worse, exactly as it does here
• Fair value gap settings: the other article here where adding something to compare against erased the indicator's own claim

Notes

• The sample covers USD/JPY in 2024 and 2025; it does not include other pairs or periods
• Only ten of the possible grids. A 20-pip brick has twenty; ten were measured. The spreads quoted are a floor
• The shuffled series throws away the shape of the bar. It reconnects closes only, so highs and lows carry no information in it. It is a valid comparison only for rules that read closes
• Two reversal rules. Some implementations require three bricks to turn
• Renko itself differs between implementations. Building from closes and building from highs and lows are both in use; this test builds from closes
• No execution detail. Spread is fixed at 0.3 pips, with no widening around releases and no rejected fills