Point And Figure Chart Trading Systems

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Point & Figure chart analysis has been around for a very long time. Its original appeal was that it was very simple for someone to maintain a large collection of P&F charts before computers came along.

“When computers arrived, they made it much easier to create bar charts and P&F charts started to fade in popularity. Recently however, as investors look for better ways to select stocks, Point & Figure charting has been ‘rediscovered’ and is once again growing in popularity”.

Point & Figure charts consist of columns of X’s and O’s that represent filtered price movements over time. Their distinctive look may be odd to people who are more familiar with, line, price bar, cadnle stick charts but once people learn the basics of P&F charts they usually either love it or hate it. Those that love it sware it is the answer to all their trading problems.

There are several advantages to using P&F charts instead of the more traditional bar or candlestick charts. P&F charts can eliminate the insignificant price movements that often make bar charts appear ‘noisy,’ i.e it automatically filters noise. It is easier to see support/resistance levels and thus trends are clearer. Some also like the fact that it removes the issue of “time” from the charting.

I have personally not used PnF Charts but I do like the “look” of them. Hopefully I can add some more articles on PnF charting in the future. And if you can recommend any let me know. I found this one article that you might be interested in reading in mean time.

PnF Charting

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