Point & Figure Charting - secret weapon?

[tinhat]

Correct, I have found that the other prices do not offer up as clear patterns as the close.



Post #10 here.



Both, for example see posts 76, 83, 86 and 88.

There are various other posts with my P&F charts.

Cheers
Country Lad

Thanks for the posts Country Lad. The WTF example was very illustrative.

To summarise you use:
3 box reversal on the closing price.
along with SIRC and OBV on a daily chart for confirmation of trend/turning-point.

A couple of questions:
1. What software do you use to construct your P&F charts?
2. What settings do you use for your SIRC indicator? I loaded the default settings into a daily chart in Incredible Charts and they both give very subtle gradients. The settings are:

SIRC
MA 13, ROC 21, Exponential.

cheers

 

[samanne1]

Sinner - you are correct about SIROC (Smoothed Index ROC) - It used to used (I think) in the old Shares magazine, if that is still published? As for its use with P&F charts.... not so sure.

there are also numerous resources out there for P&F chart also, such as

http://www.dukascopy.com/fxcomm/fx-...nd-Figure-Charting-Method&action=read&id=1298

which covers patterns, such as double tops etc. Bit like mining tho... have to go through the dust to find the gold as there is probably a lot of useless stuff also. My introduction to P&F charts was in the mid 90s in one of Guppy's books. I don't tend to use it alot myself, but do see the merit. My problem was determining reversal/box sizes etc. which is where people probably get stuck, and then its all too hard?

S

 

[samanne1]

tinhat - not sure about the charting package you mention, but also

https://www.prorealtime.com/

can draw P&F charts. Free also - I am in no way affiliated with them, but it is the program that I use to monitor stock EOD.

S

 

[Country Lad]

………… I am not sure where OBV and "Siroc" (never heard of it before, guess it's some kind of Rate of Change indicator) fit in? Are you applying those to timeseries or P&F charts?

As S has explained SIROC is Smoothed Index Rate of Change.

Indicators are of no use in P&F charts. I use these as indicators in bar charts and the chart in post 38 is an example.

What I am seeing is breakout trading, I guess after you see indicator action determining a bottom or top you're looking for upside or downside P&F breakouts as appropriate, traded on the close/next days open?

Yes, that’s a good summary, but whether or not I enter the trade will depend on the market sentiment for that share at the time.

To summarise you use:
3 box reversal on the closing price.

Correct

………..along with SIRC and OBV on a daily chart for confirmation of trend/turning-point.

Correct. I also need a breakout and/or positive market sentiment.

A couple of questions:
1. What software do you use to construct your P&F charts?
2. What settings do you use for your SIRC indicator?

1 Metastock
2 Close, 30, Exponential.
First period 11; second period 8; crossover 5.

At the time I got it many years ago, the SIROC for Metastock was a proprietary indicator and not freely available. There were many attempts made to build a similar one and the ones I looked at were nowhere near as good as the proprietary one.

My problem was determining reversal/box sizes etc. which is where people probably get stuck, and then its all too hard?
S

S, which box size to use is the main issue with people starting off with P&F. Too many change the box size to an extreme trying to force a pattern which defeats the purpose. A pattern is there or it isn't. Adjust the box size within reason but don’t spend time fiddling around with it, the pattern is there or it isn’t.

Generally, I now use 0.5 cent for share price 10 to about 50 cents
1 cent for share price 50 to 100 cents
2 cents for share price 100 to 200 cents
3 cents for share price 200 to 300 cents
4 cents for share price 300 to 400 cents
..and so on. I don't look at shares less that 10 cents.

Below are a few of the basic patterns I put together for a post on the old Stock Central nearly 2 decades ago if I remember correctly.

Hope that helps

Cheers
Country Lad

 

[tinhat]

tinhat - not sure about the charting package you mention, but also

https://www.prorealtime.com/

can draw P&F charts. Free also - I am in no way affiliated with them, but it is the program that I use to monitor stock EOD.

S

Thanks - it draws a nice P&F using EOD data.

As S has explained SIROC is Smoothed Index Rate of Change.

S, which box size to use is the main issue with people starting off with P&F. Too many change the box size to an extreme trying to force a pattern which defeats the purpose. A pattern is there or it isn't. Adjust the box size within reason but don’t spend time fiddling around with it, the pattern is there or it isn’t.

Generally, I now use 0.5 cent for share price 10 to about 50 cents
1 cent for share price 50 to 100 cents
2 cents for share price 100 to 200 cents
3 cents for share price 200 to 300 cents
4 cents for share price 300 to 400 cents
..and so on. I don't look at shares less that 10 cents.

Thanks for your reply.

By scaling up the box size in relation to the price (as is the traditional method) you are essentially crudely approximating a logarithmic scale. The advantage of using software to draw charts is that it will implement true logarithmic scaling of the box size for you (for example, box size scaled to 1% of share price).

What I find interesting from your discussion about your exit from WTF in the WTF thread (which you link to above) is that you used the price chart with SIROC and OBV to determine your exit which by my analysis got you out of the stock a bit closer to the top than from using a bearish reversal stop loss in the P&F which didn't show up until the price had got to 5.55 (the filled in circle in the image below). Whereas you got out on the 31 Jan a few percentage points higher somewhere between 5.83 and 5.74



Do you commonly find that your other technical analysis gets you out a bit higher to the top than using a bearish break signal on the P&F?

By the way, you can right click on the post number in a thread to copy the url which will take you directly to that post.

 

[Country Lad]

What I find interesting from your discussion about your exit from WTF in the WTF thread (which you link to above) is that you used the price chart with SIROC and OBV to determine your exit which by my analysis got you out of the stock a bit closer to the top than from using a bearish reversal stop loss in the P&F which didn't show up until the price had got to 5.55 (the filled in circle in the image below). Whereas you got out on the 31 Jan a few percentage points higher somewhere between 5.83 and 5.74


Do you commonly find that your other technical analysis gets you out a bit higher to the top than using a bearish break signal on the P&F?

Keep in mind that in the WTF thread I had earlier said that

I will probably be out shortly, it has lost momentum and there could be resistance at this level. Plenty of others breaking out at the moment.

The market sentiment to WTF was changing and there was a reducing momentum. Generally, this along with the indicators will see me sell if I feel that a downturn is imminent.

However, more often than not, I am doing other things rather than watching the market and it is then the P&F and indicators which will trigger my exit.

By the way, you can right click on the post number in a thread to copy the url which will take you directly to that post.

Well, there you go, we learn something new every day.

Cheers
Country Lad

 

[motorway]

Thanks - it draws a nice P&F using EOD data.



Thanks for your reply.

By scaling up the box size in relation to the price (as is the traditional method) you are essentially crudely approximating a logarithmic scale. The advantage of using software to draw charts is that it will implement true logarithmic scaling of the box size for you (for example, box size scaled to 1% of share price).

What I find interesting from your discussion about your exit from WTF in the WTF thread (which you link to above) is that you used the price chart with SIROC and OBV to determine your exit which by my analysis got you out of the stock a bit closer to the top than from using a bearish reversal stop loss in the P&F which didn't show up until the price had got to 5.55 (the filled in circle in the image below). Whereas you got out on the 31 Jan a few percentage points higher somewhere between 5.83 and 5.74

View attachment 51990

Do you commonly find that your other technical analysis gets you out a bit higher to the top than using a bearish break signal on the P&F?

By the way, you can right click on the post number in a thread to copy the url which will take you directly to that post.

Bear in mind Three box reversal chart is an intermediate trend chart . It is NOT going to be the earliest

Do you want to use someone's buy and sell signals ? or do you want to read the buying and selling pressure ?

Even to signals ,,, Always watch what happens with high and low poles ,,, You should be on alert as soon as one forms ( before the next column forms ) !

a column ends with the last urgent buyer or seller ... WHAT HAPPENS THEN matters

Your top is a very clear high pole ,,, It then retraces past 50% ... WHY . ( and what about new ground made , THRUST was it less or more than the previous columns )

What are you going to do at that point ?

you could sell as soon as the next up column make a lower high ( Wyckoff , what does he say about buy and signals on p&F , why wait for a signal ... EVERY BOX IS SIGNALLING )

look always for rising points of support or declining points of supply .. very significant early signalling !

look at 50% levels of columns and phases .

Three Box reversal charts are fine .

But be clear on the difference of reading buying and selling pressure , what a P&F chart is revealing in it's flow , and a mechanical overlay of someone's buy and sell signals ( double tops etc )

also read Wyckoff's Active Tape reading course ( not the one most people have , the other one ( , which is all about P&F and reading the buying and selling pressure . )

Think of P&F as a superior market profile. Then realize that buy and sell signals are what you determine , and that accepted P&F is just some rigid mechanical system of buys and sells , that has little to do with P&F charting itself.

Do what ever you want --> BUT KNOW WHY !

Start by understanding the FLOW of the P&F chart , is in a ( aggregated ) special way the flow of orders .

And that these orders are flowing in relation to certain things that matter ( Here is understanding )


Motorway

 

[tinhat]

also read Wyckoff's Active Tape reading course ( not the one most people have , the other one ( , which is all about P&F and reading the buying and selling pressure . )



Motorway

Thanks for your detailed reply. Are referring to:

"Studies in Tape Reading (By Rollo Tape)". The Ticker Publishing Company, New York. 1910.

available here:
http://archive.org/details/studiesintaperea00wyckrich

Thanks

 

[motorway]

Thanks for your detailed reply. Are referring to:

"Studies in Tape Reading (By Rollo Tape)". The Ticker Publishing Company, New York. 1910.

available here:
http://archive.org/details/studiesintaperea00wyckrich

Thanks

See if this works
About the fourth link down

The PDF

https://www.google.com.au/search?q=....57j0l3j62l2.10609j0&sourceid=chrome&ie=UTF-8

let me know if it works

motorway

 

[tinhat]

See if this works
About the fourth link down

The PDF

https://www.google.com.au/search?q=....57j0l3j62l2.10609j0&sourceid=chrome&ie=UTF-8

let me know if it works

motorway

Thanks motorway. That link worked.

Here is the direct link:
http://www.traderslaboratory.com/fo...off-resources-tape-reading-active-trading.pdf

For anyone searching for this in future,

The PDF file is named "Tape Reading and Active Trading.pdf"

The book itself is titled,

"The Richard D. Wyckoff Method of Trading in Stocks - Division 2 - A course of instruction in tape reading and active trading", 1932.

 

[motorway]

You can always develop mechanical signal systems.

But if you start with a Wyckoff approach , you will understand a lot more imo.

eg Try looking at any P&F chart in terms of buying and selling waves


Start with these aspects


Thrusts , Pressure & Half-way-points

On this example I have marked the DOWN WAVES. (" remember "When looking to go LONG " ?). On this Three Box Reversal chart ( nothing wrong using three box reversal , and close eod only too if you want to )



We should be measuring ( among other things )

(1) The Price movement ”” number of points advance or decline. ( this relates to the whole wave as well as the length of individual columns )

(3) Comparative lifting power or pressure on each up and down swing ( this relates to how much new ground gained--> very revealing , how far above the previous up (down ) column has a column advanced )

(5) half way points


using these see how the dynamics change ? Each aspect alone was a clear signal , and of course BUY and SELL signals were following along

 

[Country Lad]

tech/a has started the Technical Training Exercise thread which gives MTU as an example. I thought it may be worthwhile showing my P&F trade as another one of no doubt numerous methods where people have traded this one and it can be seen alongside tech's method. I didn't want to post this in his thread and take it off topic.

One difference in the result of the 2 methods is that I am currently still in MTU by using the P&F method whereby tech has exited the trade by his method. We shall see soon whether or not I have stayed in the trade too long.

Of course as I have said elsewhere, the trade has involved not only the P&F patterns but also the market sentiment and other indicators on the way.

I have read Wyckoff and some of the others on P&F charting years ago and have found those theories now unnecessarily too technical, too involved and too time consuming. Times have changed since those early days when it was all done with pencil and paper. Now we can instantly see the market sentiment, measure various other indicators which make the use of P&F far more simple when combined with these other tools which were not available at the time. I should note that I look for trades which suit my methods based on patterns resulting in fewer trades than if using Wyckoff.

It really doesn't matter which method is used, one issue, the common point of tech's and my P&F method, is that stops are set and should take the emotion out of the trade and make it easier to automatically sell when the stop is hit.

The second chart changes the box size commensurate with the increase in price.

Cheers
Country Lad

 

[Country Lad]

Market sentiment changed to strongly negative, sell 3.72 times buy after 30 minutes and algorithm showing continuing sell bias. Sold at average $5.94.

Cheers
Country Lad

 

[Trembling Hand]

I have read Wyckoff and some of the others on P&F charting years ago and have found those theories now unnecessarily too technical, too involved and too time consuming. Times have changed since those early days when it was all done with pencil and paper. Now we can instantly see the market sentiment, measure various other indicators which make the use of P&F far more simple when combined with these other tools which were not available at the time. I should note that I look for trades which suit my methods based on patterns resulting in fewer trades than if using Wyckoff.

Yeah I really agree with this. You see lots of dudes talking about traditional T/A setups like they have some sort of predictive properties. H & S, Cup and handles, Straight lines like they are brick walls etc etc. I think the markets are far more chaotic and dynamic that you cannot shoehorn into basic concepts from many many moons ago.

Still there are patterns out there to be found. Just not the same from 50-100 years ago. if they ever were of use.

 

[CanOz]

Yeah I really agree with this. You see lots of dudes talking about traditional T/A setups like they have some sort of predictive properties. H & S, Cup and handles, Straight lines like they are brick walls etc etc. I think the markets are far more chaotic and dynamic that you cannot shoehorn into basic concepts from many many moons ago.

Still there are patterns out there to be found. Just not the same from 50-100 years ago. if they ever were of use.

Most useful patterns are basically pauses in a trend that allow trade to be wrong or write with a calculated degree of risk to reward. I don't consider them to be predictive, although allot of traders use them with that as the 'edge'. As Bulkowski has revealed, only a few actually have an 'edge'....

It make sense that P&F is the same i guess.

CanOz

 

[tinhat]

tech/a has started the Technical Training Exercise thread which gives MTU as an example. I thought it may be worthwhile showing my P&F trade as another one of no doubt numerous methods where people have traded this one and it can be seen alongside tech's method. I didn't want to post this in his thread and take it off topic.

View attachment 52323

Thanks Country Lad. I for one read every post made to this thread. In your first chart you identified a "bullish falling wedge". What about this pattern made you identify it as bullish?

I would find it useful if when posting charts people stated the box size and reversal.

 

[Country Lad]

What about this pattern made you identify it as bullish?

There are a few basic patterns which have a high probability of repeating and I showed these in an earlier post. There are different names for these depending who you speak to or which book you read. Maybe I should call them uptrending or downtrending thingies.

Cheers
Country Lad

View attachment 51985

 

[piggybank]

Below are a few of the basic patterns I put together for a post on the old Stock Central nearly 2 decades ago if I remember correctly.

Hope that helps

Cheers
Country Lad

View attachment 51985

Gee those were the days, good old stock central. Country Lad is Fastoy still with us do you know? Is Austin Hui's follow up site "Traders Network" still going?

Cheers
PB

 

[Country Lad]

Gee those were the days, good old stock central. Country Lad is Fastoy still with us do you know?

He posts on HC now & then under another nick to stir up some people.

Is Austin Hui's follow up site "Traders Network" still going?

No, he ended up working full time and didn't have the time or inclination to keep it going. A few of us wanted to take it over but no joy.

Cheers
Country Lad

 

[tech/a]

This is good stuff Country thanks for sharing.

Met quite a few of the old Stock Central when in Sydney once.
I'm sure a few like Amory hill who was one really strange dude
Aren't with us
Don't remember PiggyBank.