Point and Figure Charting

[motorway]

The Figure chart can become inactive ( but ) On the other hand, It may show many fluctuations..... while the verticals are unchanged. For example, if the high full figure of a stock on a certain day were 45 and the low 40, there might be several fluctuations back and forth between 42 and 43 on the figure chart, but no indication of this would appear on the vertical chart. For these reasons it is vital to keep both forms of chart

A loose quote from RDW....He is talking about the adaptive nature of the FC
compared to the static nature of the vertical line ( A BAR in a Time Fame )

Fixed Time intervals march across the horizontal Axis
They can give a false sense of predictive power

I can always tell you what the time will be at any time in the future

But I can not tell you how many reversals there will be on the FC
That is intrinsic time . Time that speeds up and down

It is work done ---> Energy being transferred

A modern Figure Chartist ( he seems to realize it too )--->

Every morning, Richard Olsen hops on his bike, buckles on his helmet and glides down the hill to his office in Zurich, Switzerland. In the evening, he pedals uphill to his home. "It takes about eight minutes to get to the office," he says, "but I need 16 or 20 minutes to get home - depending on the weather." In his head, however, the uphill journey takes many times longer than on his watch. "That's the difference between intrinsic time and physical time," he laughs, referring to one of the epiphanies that got him hooked on "high-frequency finance" - his term for an approach to markets that, in part, measures time in terms of volatility instead of seconds. "It's the same concept that's behind point-and-figure charting, except we do it mathematically instead of visually, which is not an insignificant achievement."

Why do it ?

why are (RDW) Both types of charts VITAL

Richard Olsen---->

One fundamental problem in analysing financial markets is that we’re working on the wrong scale, the wrong time-scale. In other words, we interpret that scale - the spatial, physical time-scale - entirely wrongly. We haven’t got any intrinsic time! So we have to find out what’s meant by the term «intrinsic time» and how it should be used. I say we’re taking up a wrong position if we calculate using physical time. Mandelbrot’s formula ( Fractals ) is only an abstract mathematical aid. Everything depends on how it’s used - in my case, for example, I have to transform physical time into intrinsic time and use it to find the right scale. There are many people who have made use of a fractal approach without knowing. Technical analysis, for example, is full of fractal thinking. But the people involved in that don’t talk about a science, they simply start from experience and see that fractal thinking is something extremely useful. But it’s important to realise that that the fractal element is only one part of the solution. The other is the intrinsic-time concept. Without that concept, you can’t arrive at the right solution. Intrinsic time is a key concept ( The secret of the whole business lays in the fluctuations----unfolding in their own time, The Game In Wallstreet ~1898 ) When we talk about fractal structures, we’ve only got half of it… The other half is provided by intrinsic time. And if you build that in too, it makes everything even more fractal. The world only seems less fractal than it is because we operate with physical time. But if we replace it by intrinsic time, the world becomes much more fractal. Intrinsic time is - to put it a bit drastically - when you think about --Real Life. In our normal lives, physical time is a foreign body.

The Figure Chart is not out of date
It is mainly just misunderstood


Differences of opinion impact on the "floating Supply"
The adaptive nature of the FC means that it's velocity
is directly determined by these differences of opinion

We do not need so many shares to "change hands"

Because the Floating Supply is a fluid quantity
Which the Fluctuations Themselves impact on and change ...

YES there is change of ownership
strong and weak hands

But there is also the crystallization of sentiment
and the building of value ( or opposite )

Value is a slippery concept

For our purposes it is built up and torn down by the "fluctuations"

The FC is always moving to and away from congestion
From areas of Risk and Reward
Cause expended ( extended ) and engendered

Where are the ENTRY points ?

The structure and the dynamic will reveal

motorway

[motorway]

The standard compliment of statistical techniques used to identify predictable market structure assume that the data are independent and identically distributed. Further,they are only capable of identifying regular periodic cycles. Yet, financial returns data are not independent and cycles are most probably not periodic. Non-Periodic Australian Stock Market Cycles: Michael D McKenzie

The "Figure Chart" is not standard compliment..

From the general formations (not so-called patterns such as “saucers,” “baskets,” “fulcrums,” etc., which are popular with some purely theoretical technicians) on the figure charts we are able to detect accumulation or distribution, and we see, clearly marked, the lines of support and supply. We can also identify the marking up and marking down periods to excellent advantage by means of these charts. RDW

500pt x 1 chart... I have marked some previous points of support and resistance, some halfway points
and the current trading range.


Now look at the chart and consider How the campaign is conducted..


Consider what it means that columns are long or short --> without correction ?
How a following column confirms or negates .
How a statement by one column is rejected by another
and how demand and supply assert in turn
and then reassert..


It is a dialectical Discussion
Every column is a statement ( Bullish or Bearish )
A thesis and then the anti-thesis
But never a FINAL synthesis


We still only have here the static aspects
But , consider how a column can slow and pause before a reversal
or could accelerate into the reversal
How a column could accelerate from the reversal .
or how a reversal could occur as the "swings" decelerate


Think of how in a dynamic sense the chart can come to a "dead centre"


The chart is a graphic of demand and supply
consider what it means when price moves up or down with a series of short columns
backing and filling

Consider how at times how differences of opinion vanish and large "uncorrected" moves occur


How is the Campaign conducted ? ( It is visible right here before your eyes )


These BOXES contain significant amounts of PRICE VOLUME & TIME
Every reversal is important
every time more or less ground is made
is revealing something right then--Something that matters.


eg The last column is the most significant reversal since the "TOP"


Every reversal is a point of SUPPORT or RESISTANCE


The Dynamic aspects are why we can not simply Buy "double tops" or sell "double bottoms"
Why we need to identify ( By The Action ) a spring board

We could draw more sensitive trend lines
But what is the action of tops and bottoms suggesting ?

Are the points of resistance still falling lower ?
How important is the next column ?
Where are the significant zones of previous support and resistance

What happens as price approaches or leaves those areas
When it meets those areas

up ahead

Some obvious observations
any others ?

motorway

[PFtrader]

I just bought Bull's-Eye Broker point and figure charting software. Do you have any experience of vertical and horizontal counts for profit taking, and which one of them is more accurate? Is there a great difference between them, or do they usually project the price objectives at similar levels. The concept is explained in this link. Point and Figure charting software Bull's-Eye Broker

Is it better to use price objectives or is it better to close your position at the next opposite signal. I.e. if you have bought, should you sell on the next sell signal?

[motorway]

Originally Posted by PFtrader I just bought Bull's-Eye Broker point and figure charting software. Do you have any experience of vertical and horizontal counts for profit taking, and which one of them is more accurate? Is there a great difference between them, or do they usually project the price objectives at similar levels. The concept is explained in this link. Point and Figure charting software Bull's-Eye Broker Is it better to use price objectives or is it better to close your position at the next opposite signal. I.e. if you have bought, should you sell on the next sell signal?

Most important thing is the TREND
Why because there are trends

IE the BOXES on the P&F chart have memory then
The BOXES are not Fluctuations of a fair coin
But of a coin where participants
place their bets ( take positions )
By running to one or the other side ( hence trends )
( Some other very valuable analogies should be considered )

The two counts have different "mechanics"

Wyckoff ( and de villiers ) talk about
interior ( horizontal count ) ballistics
and exterior ( Vertical Count ) ballistics

Wyckoff ( and de villiers ) used exclusively horizontal count
because they were using one box reversal charts as the foundation
and they were interested in seeing "CAUSE"
Horizontal count = Diagonal Lines ( 1 unit of cause = 1 unit of effect )

Only type of vertical count in One BOX charts is Measured Move

With three BOX charts
Today see total dominance of vertical count ( RDW used 3 & 5 reversal charts as well but to confirm the one BOX not as foundation )
( They do not reveal congestion and Cause so clearly )

Why do you multiply by three with Vertical Count ?
Not because it is a three box reversal
But because of DOW theory of three legs to a Primary Trend

An impulsive move off a rejection of the other side ( important VCs are abused)
is seen as a precursor ( early savvy adopters and their urgency )

H counts wyckoff gives importance to correct use as well


Counts are ways of quantifying
important principles at work in the P&F charts

IF BOXES are a memory process
counting is useful
if BOXES are of a fair coin
Then Counting is not useful even harmful

Are there Trends --YES
demand and Supply are dynamic forces

and are related to how much demand and supply are already active
( eg memory & Trends )

consider there are two keys that unlock the gold

one is the P&F chart itself

The second is what scale ( what box size )

IN markets with min bids approaching 0 ( remember RDW min bid was as 1/8 )

P&F filtering is even more important today than in RDW day
and he said even then that these charts were VITAL

Unlike coin toss charts
Charts of active stocks ( sponsorship )
move in diagonal lines ( 1926 )
eg vertical to horizontal there is a relationship that is NON RANDOM

So YES ---Count
BUT you are not predicting
But identifying
Counts are a tool
qualified by the trend , position in the trend
overhead resistance & underlying support ( areas of congestion )

And also consider that counts are qualified by "time"
If your chart pauses and corrects in terms of time ( This is T as duration , there is P , V & T
T in Wyckoff terms not Gann or Elliot )
That there is cause building on a smaller scale
( WAVES BUILD UP AND DOWN )

motorway

[motorway]

Originally Posted by PFtrader I just bought Bull's-Eye Broker point and figure charting software. Do you have any experience of vertical and horizontal counts for profit taking, and which one of them is more accurate? Is there a great difference between them, or do they usually project the price objectives at similar levels. The concept is explained in this link. Point and Figure charting software Bull's-Eye Broker Is it better to use price objectives or is it better to close your position at the next opposite signal. I.e. if you have bought, should you sell on the next sell signal?

Pftrader ?

Also--> what is a BUY or SELL signal ?

double tops ,spread triple bottom ,bullish signal reversed ?

what makes them so ?

THE TREND IS WHAT IS IMPORTANT
and naturally THE TURNING POINTS

Predicting them ( like with a clock ) NO

But identifying them ( like with a stick ) YES

Those "signals" are part of a trading system that overlays ( utilizes ) the
"FIGURE CHART"

A Wyckoff trader might well buy underneath those patterns

Using "TRUE TRENDS" ( revealed by the fluctuations themselves )
TRENDS confirming to TRENDLINES ( as adjunct )
Congestion Analysis ( IMPORTANT )
& COUNTS

Dynamic and Static aspects

More of this

Writing in the Wall Street Journal on January 31st, 1901, Charles Dow compared the ebb and flow of the ocean to the action of the stock market when he said: A person watching the tide coming in and who wishes to know the exact spot which marks the high tide, sets a stick in the sand at the points reached by the incoming waves until the stick reaches a position where the waves do not come up to it, and finally recede enough to show that the tide has turned. This method holds good in watching and determining the flood tide of the stock market.

and less ( lot less ) of BUY AND SELL SIGNALS

DOW saw three movements at work
TIDES WAVES RIPPLES

Wyckoff saw FOUR

Decimalization ( quoting in .01c instead of 1/8s )

means we need to give some thought to BOX SIZE

there is both more noise and more signal ( think about that )

FIGURE CHARTISTS
used 5 box reversal 3 box reversal and 1 Box reversal

( mathematical relationship at work here )

TIDES WAVES RIPPLES

I use 4 charts of different scales

at one one end is the TIDE
at the other the "Speculative cycle"

These are all aperiodic ( There is no clock no tide chart )
But they can all be identified and utilized for profit

with "Sticks in the Sand "]

Never confuse the "FIGURE CHART" with a particular trading system-->double tops /bottoms etc..

In working with THE incoming TIDE --> There are only BUY SIGNALS of different attractiveness.. A "Sell" signal could be a very good one

With the Figure chart you have an OBJECTIVE WAVE CHART

just made for counting all sorts of things
Sticks in the sand and the WAVES

motorway

[strohem]

TTT

Originally Posted by motorway The "Figure Chart" is not standard compliment.. Some obvious observations any others ? motorway

Fascinating discussion. This is the second time I've viewed this thread. I have some questions - on and slightly off topic...

1) Motorway, in an earlier post, you made mention of the 45 degree angles that more recent advocates of PnF chartists use. I'm unclear as to whether or not you feel they are valid within the confines of a PnF-only methodology. Could you spend a little more time on that matter?

2) I've always felt I had a reasonably strong grasp on PnF and would consider it my foundation with respect to RS and portfolio construction and risk management (Bullish Percents), not to mention that I've had great success swing and position trading with it. I agree that it is misunderstood.

I'd like to admit I used it solely as my strategy, but that's not true. I learned vertical charts and volume studies first. After being mentored in PnF, however, I was encouraged to learn Wyckoff. (I did, but not as deeply as I should have.) Make no mistake - I still have an uncontrollable habit of mentally transposing bar chart data into a 3 box reversal PnF chart and remembering it that way.

I'd like to know how many others have sort of "amalgamated" this craft with other forms of analysis. Anybody care to pipe up/chime in??

3) Can this thread be resurrected? Others here who wish to keep the discussions ongoing?

4) I heard that Craig Schroeder had some setbacks... anyone aware of the latest with him?


S

[motorway]

45 degree lines were used in Wyckoff's day
They only make sense on P&F charts

Gann tried to make them work on bar charts
because of his view on time ==> That because you knew what the time on a clock would be at ANY time in the future , you could PREDICT .

So he squared PRICE and TIME FRAME ( not with time but with TIME FRAME--WRONG )

P&F chart IS a SQUARED CHART of MARKET EVENTS in INTRINSIC TIME

There are only real forces that make the BOXES and make the BOXES move.

These are WORK and ENERGY,

45 angle is a measure of a certain .probability distribution of the BOXES ( EVENTS )

John DURAND (1926 ) gave it a number and said it was the distribution of MANIPULATION
( as Distinct From RANDOM )

It is also an objective context for momenta ... curvature of the price series ( trend ) and acceleration and deceleration ( changes in TREND )

RDW did not use.. but it IS the relationship of cause and effect ,, and in drawing trend lines.. you end up drawing many at 45 .. because of what it represents ( a reality )

When stocks were in 1/8s this had significance for low priced stocks and BOX size ( 1 pt )

meant for many stocks a P&F chart was a very low resolution chart

NOT NOW some things in practise are DIFFERENT..

eg log charts ? ( log BOXES ? )

and yes we can use ( SHOULD USE ) ALL FACTORS

PRICE MOVEMENT (in INTRINSIC TIME==> EVENTS OF WORK AND ENERGY )

TIME ELEMENT ( THIS IS DURATION , How LONG demand supply have ball IS important and what they then achieve with it )

Volume and Intensity of ACTION

pressure and support..


USE of NESTING SCALES as waves build UP and DOWN..

B% is a type of POSITION SHEET

P&F RS is a powerful screening tool and QUALIFYING TOOL..

The Figure Chart... regards FIXED TIME FRAMES as NOISE
But NOT TIME in a WYCKOFF SENSE that is an IMPORTANT MEASURE..

TIME is IMPORTANT
TIME FRAME does not exist
TIME HORIZONS EXIST..

A 45 line is an example
of CONSTRUCTAL LAW ( google it )

The Constructal Law/Principle: "For a finite-size (flow) system to persist in time (to live), its configuration must evolve such that it provides easier access to the imposed currents that flow through it."

Motorway

Enantiodromia

[georg7e]

I am looking to buy an indicator or an add-on for Tradestation that charts waves and charts
the volume for each wave. The indicator shown on the chart posted by Tape Reader on Page 4 would do just fine.

[BlowFish]

SwingLeeII would do the job. Freebie from Clyde Lee.

[georg7e]

I appreciate you help Blowfish. I checked out The Swing Indicator, but it doesn't look like it includes the total volume for each swing.