Trading Thoughts - Auto-tuning Tick Charts to Match Renko

Like I have said before in prior posts, I am a fan of renko charts because they simplify the price action and act somewhat like a price filter.  Unfortunately, they can be terrible for entries and exits because the price can pass through a wide range before the next bar is formed.  I had a thought that it would be nice to be able to use a tick chart that was sized in such a way that it would match a corresponding renko chart.  Below is a picture of a renko chart with a range of 2.

You can use the average near-term volume to determine a good tick chart size that will be representative of the renko 2 chart.  In this case, I used a 20 period simple moving average.  The picture above shows that the average volume is around 160.  It seems that a tick size about 50% of the renko average volume produces a plot that is similar in appearance.  Below is a picture of a chart with a tick size of 80, which is about 50% of the average volume from the above chart.

A comparison of the two charts shows that they are quite similar.  The advantage of using the tick chart, is that we can use indicators from the renko chart to interpret signals on the tick chart.  It is often easy to read indicators based on renko charts because the price action is much cleaner.  Obviously, you would want to create a program that would auto-tune your chart to display the correct tick price action.  An indicator could be created to represent the price action (OHLC) in the correct tick format.  It is important to note that you need to be careful to make sure that there is enough volume.  You don't want to be trading a chart with an average volume of 5 ticks because it could create a lot of problems.  I would suggest putting a minimum requirement that the number of ticks cannot go below, for example 30.