What are Point and Figure Charts?

Question

Please recommend a good book on Charting Methods and easy software for stock trading. Thank You

Answer 1

The distinction of the Point & Figure chart, what makes it unique and different from all other forms of charting, is that it plots day-to-day price movements without taking into consideration the passage of time.

A column of X's is used to illustrate a rising price, while O's represent a falling price. Price must fall by a preset amount before the switch between X's and O's.

It filters out non-significant price movements, and enables the trader to easily determine critical Support & Resistance levels, which can be horizontal price lines, or diagonal trend lines.

Some good books on Technical Analysis

The Beginner's Bible in Technical Analysis is:
Edwards & McGee"Tech. Anal. Of Stock Trends"

Droke, ClifTechnical Analysis Simplified

Kahn, Michael N.Tech. Anal. Plain & Simple

Kamich, Bruce M.How Technical Analysis Works

Lefevre, EdwinReminiscences of a Stock Operator

Lofton, ToddGetting Started in Futures

Lowenstein, RogerBuffet (Warren)-The Making of a Capitalist

O'Neil, William J.How to Make Money in Stocks

Oz, TonyHow to Make Money From Wall Street

Rotella, Robert P.Elements of Successful Trading, The

Schwager, JackStock Market Wizards

Answer 2

Daryl Guppy is an established author on technical trading and it was from him that I first learned about point and figure charts.

Just use the free Incredible charts software - that has point and figure charting.

And now to the real answer of what is a Point and Figure chart - from what I can remember it is a chart full of noughts and crosses.

It simply draws the same info on a chart from a different perspective.

I think it has noughts for +ve days and crosses for -ve days.

For each day the stock goes up, it scores a nought - each day it goes down it scores a cross.

It only starts a new column once if the trend changes from day to day.

Answer 3

Point and figure charts do not have a time axis like regular stock charts.
A point and figure chart is a grid with each vertical line representing one dollar. As the stock price moves, the grid is filled in with X's to represent price increases and O's for price decreases.

I use these charts occasionally. They help me define a trend when a stock has a very choppy price pattern.

Stockcharts.com has a good explanation of these charts, and has them on their website for stocks listed in the U.S.

I have read the book 'Point and Figure Charting' by Thomas J. Dorsey. I would recommend that book.

Answer 4

The basic premise behind point and figure is "the trend is your friend". Stocks that are moving up usually continue moving up and stocks that are moving down usually continue to go down. Here is the basic info on point and figure http://www.investopedia.com/articles/technical/03/081303.asp For books and how to use point and figure in your investing, try the 3 month trial from Dorsey Wright and Associates, http://www.dorseywright.com

Answer 5

you could also elect to envision a close education guide on ForexAbode which components the info of the form of aspect & confirm charts and a thanks to apply those charts contained in the trading utilising the chart varieties and the resistance and help trend lines.