P&F Pattern

[TheStockDude]

Has anyone had any success using it? I cant say that I am entirely sure I am reading it correctly, but it looks more like a football play with the X's and O's than a stock tool. If anyone has a decent site that explains the chart please post it here because I have yet to come across one!

[DogDayTrader]

I havn't really used them before, but I believe they are sposed to be used to help one identify entry and exit points as they help to show support and resistance levels. Anyhow, here are a few places to get you started.

StockCharts.com - ChartSchool - Point & Figure Charts
StockCharts.com - Support :: Point & Figure Charting Workbench - User Documentation
Point & Figure Chart

[TheStockDude]

One thing I have noticed is that splits and reverse splits seem to kill the chart, which technically makes sense I guess. Take a look at CTIC:

http://stockcharts.com/def/servlet/SC.pnf?chart=ctic,PLTADANRBO[PA][D20090803][F1!3!!!2!20]&pref=G

[Talos]

hiya,

P&F charts are best for spotting support and resistance.
P&F's use no time frame , they move solely from price change,up or down. That's why they can show historical resistance and support from very far in the past. They don't work well for finding exits or entries however, unless you intend to set your buys or sells at support and resistance points.

[geezer]

I've been using P&F charts for years. I agree with Talos that they are really useful in identifying support and resistance levels.

P&F was originally used exclusively in intra-day trading, but for me, long term stock trades are where it has been most helpful.

If anyone is interested, the best book I've found on the subject is Jeremy du Plessis, "The Definitive Guide to Point and Figure." (It'll set you back the price of a decent dinner, though.)

Also, there is some software called "Bull'sEyeBroker," that I'd recommend.

--geezer

[Talos]

Hello Geezer,

Thanks for that confirmation.

Same goes for me too; I use them when I need to identify key support and resistance points. On a candle chart, the support and resistance can sometimes get lost in the "noise", the beauty of P&F's is that they are exactly what they are.. There is no bias or personal interpretation of them. If it shows support at a certain point then that’s where at least that one support level is.., there could be more but there would be no disputing the one in question.

I have not even tried to use them for intraday trading. Instead I use them to confirm what I see on a candle chart, or to reveal “hidden” support or resistance levels that can, and so often do get lost in the jumble of candles…., one of their very unique qualities.

-T

[geezer]

Talos, yes, I agree. Right or wrong, P&F charts have an interpretation that is objective. This helps a lot sometimes. Looking at the P&F sometimes reframes the market in a useful way and gets me out of a locked in view.

On October 23rd, I called a top in the market on my blog and went short. I'm a genius -- market goes down. But in the following days, I get to looking at the P&F chart, and based on that, there's no way this market is going down! So I go flat on October, 29. I'm an idiot -- market keeps going down. But then, looking at the P&F again, I call a for a long on November 4. I'm a genius -- market shoots up.

Actually, I messed up. I should have just remained long in October. It worked out by luck. My point is, though, that the P&F chart made the difference for me, mostly because it got me out of my fixed idea, which I'd had for months, that the market was going to top out at 10,000 for the near term.

So, well, I wouldn't want to try and trade with P&F only, but for me its a valuable additional tool.

--geezer