History
The technique is over 100 years old. "Hoyle" was the first to write about it and showed charts in his 1898 book, The Game in Wall Street. The first book/manual dedicated to Point and Figure was written by Victor Devilliers in 1933. Chartcraft Inc, in the USA, popularized the system in the 1940s. Cohen founded Chartcraft and wrote on point and figure charting in 1947. Chartcraft published further pioneering books on P&F charting, namely those by Burke, Aby and Zieg. Chartcraft Inc is still running today, providing daily point and figure services for the US market under the name of Investors Intelligence. Veteran Mike Burke still works for Chartcraft, having started back in 1962 under the guidance of Cohen. Burke went on to train other point and figure gurus, such as Thomas Dorsey who would go on to write authoritative texts on the subject. A detailed history can be found in Jeremy du Plessis’ ‘The Definitive Guide to Point and Figure’ where many references and examples are cited. Du Plessis describes the historical development of these charts from a price recording system to a charting method. Traders kept track of prices by writing them down in columns. They noticed patterns in their price record and started referring to them first as ‘fluctuation charts’ and then as ‘figure charts’. They started using Xs instead of numbers and these charts became known as ‘point charts’. Traders used both point charts and figure charts together and referred to them as their point and figure charts, which is where Du Plessis suggests the name point and figure came from. Modern point and figure charts are drawn with Xs and Os where columns of Xs are rising prices and columns of Os are falling prices, although many traditionalists such as David Fuller and Louise Yamada still use the Xs only point method of plotting.Advantages of point and figure
Point and Figure charts are based primarily on price action, not time. If there are no significant price moves over time, P&F charts will show no new data. This difference can make P&F charts ideal for detecting directional patterns and trends in a condensed format.How to draw
45 degree trend lines
Because point and figure charts are plotted on squared paper, 45 degree lines may be used to define up trends and down trends from important highs and lows on the chart allowing objective analysis of trends.Price targets
Also in common usage are two methods of obtaining price targets from point and figure charts. The vertical method measures the length of the thrust off a high or low and projects the thrust to obtain a target. The horizontal method measures the width of a congestion pattern and uses that to obtain a target.Computerization
In the US, Chartcraft used anSee also
* Advisors SentimentExternal links
Further reading
* Aby, Carroll D.Jr. ''Point & Figure Charting: The Complete Guide'', * Anderson, J.A. and Faff, R. "Point and Figure Charting: A Computational Methodology and Trading Performance in the S&P 500 Futures Market", '' International Review of Financial Analysis'' (Forthcoming, 2006) * Anderson, J.A., 2004. "P&F Charting - Computational Method and Distributional Forms", chapter in ''Computational Finance & Its Applications'', Witpress, UK * Burke, Michael L. ''All New Guide to the Three-Point Reversal Method of Point and Figure'', 116 pages, ringbound, . * Cohen, A.W. ''How to Use the Three-Point Reversal Method of Point & Figure Stock Market Timing'' first edition 1947 - Out Of Print * Cohen, A.W. ''The Chartcraft method of point and figure trading - A technical approach to stock market trading'' * Cohen, A.W. ''Technical indicator analysis by point & figure technique'' * De Villiers, Victor and Owen Taylor. ''The Point and Figure Method - of anticipating Stock Price Movements'', * De Villiers, Victor ''The Point and Figure Method - of anticipating Stock Price Movements'' - A reprint of the 1933 edition including a chart on the 1929 crash, * De Villiers, Victor Taylor. ''Devilliers & Taylor On Point And Figure Charting'', * Dorsey, Thomas J. ''Tom Dorsey's Trading Tips - A Playbook for Stock Market Success'', * Dorsey, Thomas J. ''Sicher anlegen mit Point und Figure. Klare Signale mit einfachen Methoden'', * Du Plessis, Jeremy ''The Definitive Guide to Point and Figure,A Comprehensive Guide to the Theory and Practical Use of the Point and Figure Charting Method'', * Hauschild, K. and Winkelmann, M. (1985), ''Kapitalmarketeffizienz und Point and Figure Analyse, Kredit Und Kapital'', 18. * Kaufman, Perry J. (2005), ''New Trading Systems and Methods'', Chapters 5 and 21, * LeBeau, Charles and Lucas, David (1991), ''Technical Traders Guide to Computer Analysis of the Futures Markets'', * Rivalland, Marc ''Marc Rivalland on Swing Trading'', 214 pages, paperback, * Stottner, R. (1990), - P&F-Filteranalyse, Averaging-Strategie und Buy&Hold-Anlageregel, Jahrb. f. Nationalok. u. Stat., 207. * Weber Heinrich and Kermit Zieg. ''The Complete Guide to Point and Figure Charting: The New Science of an Old Art'', * Wheelan, Alexander H. ''Study Helps in Point and Figure Technique'', first edition 1947 - Out Of Print * Zieg, Kermit Zieg. ''Point and Figure Commodity and Stock Trading Techniques Also Options Bonds International Currency Indices'',References
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