Point & Figure (P&F) charting has a long history and known to be the oldest charting method. Though it is difficult to claim that any one person has invented it, the first reference to P&F came in 1898 from a writer named "Hoyle". The method is born out of necessity of recording the prices by the floor traders. There are evidences that Charles Dow used to plot the chart with this method then called 'Book Method'. P&F construction has traveled though various forms and called by several names during its long journey.

P&F charts were very popular before computers came in because it was simple to plot and maintain the large collection of charts. This classic paper-pencil based method was largely put aside as technology made other charting methods easier. But recently technicians are realizing the importance of the age old technique of timeless charting and there is a growing interest seen in P&F from all corners of the charting community. Point & Figure charts consist of columns of X's and O's that represent rising and falling prices respectively. P&F charts do not plot time and volume, they move only when price move. It filters insignificant market noise and focuses on what price is doing. The 3-box Reversal Method is the most popular P&F charting method. P&F patterns are very easy to find that filters out unnecessary data.

Simplicity and objectivity are major advantages of Point & Figure charts. P&F displays a larger picture of market and patterns are very easy to find out. They provide a simple, yet disciplined method of identifying current or emerging trends in market prices.

Objective trend lines (45 degree trends), Price projection techniques of Horizontal patterns & Vertical columns are unique advantages of P&F charts. Any kind of market or instrument, in all time frames can be traded solely through P&F charting techniques. It can also be used along with other methods for combination or confirmation.

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Basic Point & Figure signals

Double top buy and Double bottom sell patterns are basic Point & Figure chart formations. They are simple swing breakout formations and their usage depends a lot on the box-value and time frame. Simple trading systems can be designed on P&F charts using these basic signals.

P&F
Major advantage of Point & Figure charts is the unique method of constructing them that removes insignificant information from the data and brings objectivity and present a clear picture. It helps in reducing number of trades and helps in dealing with emotional trades or overtrading which is a major concern of discretionary trading.

There are more patterns and formations to learn once these basic signals are understood. These signals can be utilised to build systems and run scanners for filtering the stocks from the universe.

Below are the images of different P&F formations including basic patterns.
 

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Double Top buy Signal

Basic buy signal: 3 column bullish pattern




 

 

 

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Double Bottom sell Signal

Basic sell signal: 3 column bearish pattern




 

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Triple Top buy Signal

5 column bullish pattern

 

 

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Triple Bottom sell Signal

5 column bearish pattern



 

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Catapult Buy Signal

7 column bullish pattern

 

 

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Catapult sell Signal

7 column bearish pattern



 

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Bull Trap

4 column bearish pattern


 


pfchart8Bear Trap

4 column bullish pattern






 

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Bullish Broadening Pattern

5 column bullish pattern




 




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Bearish Broadening Pattern                                                                      

5 column bearish pattern






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High Pole Pattern

4 column bearish pattern





 

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Low Pole Pattern

4 column bullish pattern





 
 

pfchart13Double Top Buy after support

4 column bullish pattern


 

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Double Bottom Sell after resistance

4 column bearish pattern




 

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Rising Bottom Double Top Buy

4 column bullish pattern




 

pfchart16Falling Top Double Bottom Sell

4 column bearish pattern
 



 
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Rising Bottom Triple Top Buy

5 column bullish pattern
 

 


 

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Falling Top Triple Bottom Sell

5 column bearish pattern





 

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Diagonal Triple Top

 

5 column bullish pattern





 

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Diagonal Triple Bottom

5 column bearish pattern





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Bearish Pattern that reversed

6 column bullish pattern



 

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Bullish Pattern that reversed

6 column bearish pattern




 

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Bull Tap variation

6 column bearish pattern




 

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Bear Trap variation

6 column bullish pattern






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Long Tail down
Long Tail down is a column of 'O' with 20 or more boxes




pfchart26Long Tail up
Long Tail up is a column of 'X' with 20 or more boxes.
 

 



Below is a list of Reference reading for further study on the subject.

 


 

Reference Reading & Further Study

  • Du Plessis, Jeremy., The Definitive Guide to Point and Figure, Harriman House LTD, 2009
  • Cohen, A.W., How to use the Three-Point Reversal Method of Point and Figure Stock Market Trading, Chartcraft, 1978
  • Dorsey, Thomas J., Point and Figure Charting, Wiley Trading, New York, 2001
  • De Villiers, Victor and Taylor, Owen, De Villiers and Taylor on Point and Figure Charting, FT Prentice Hall, 2000
  • Zieg, Kermit C., Point & Figure Commodity & Stock Trading Techniques, Traders Press, Greenville, 1997 c