A Little Old Fashioned Approach – P&F

Point and figure:With thanks to Stockcharts.com


What the Heck is This?

So here’s something a little different and possibly bewildering. I will not pretend to be well informed  on these type of charts. They are a legacy from floor traders who were trying to keep track of stock prices in the 1930s, I understand (others may know more about this). The beauty of this, is that it is price action, and nothing more. While we have excellent freely available real time and historic charts-Japanese candlesticks indicators etc, P&F is such a great graphic. They are freely available from http://stockcharts.com/freecharts/marketsummary.html?E as are many othe variants.

How Does it Work? Is it Helpful? Is it Oversimplification?

P&F works on the basis that price change is measured upwards with an ‘X‘ and down with a ‘O‘. When the price moves 3 boxes, as in our example, the column changes -the latest column showing a rise from6750,with the previous column showing a drop to 6700. The column changed to ‘X’ when the FTSE hit the 3 box reversal level at 6850, but the 6750 and 6800 boxes are added. Months are denoted these days by red numbers, up to September and then a,b,c for the last 3 months.( no space for 2 digit numbers) This is a modern thing, and time is not so important.

What’s The takeaway?

If you are interested in trying to make sense of the underlying, TA-technical analysis is favoured by a great many traders and in the UK we have http://www.updata.co.uk/blog.html#  and they have been known to do excellent seminars and presentations. We all come to trading in our own way and some swear by TA, others look at ‘fundamentals’ and show utter disdain for ‘chartists’. I doubt you’ll find a trading room without charts on screens, just sayin’……..

link to the above if it’s not clear http://stockcharts.com/freecharts/pnf.php?c=$FTSE,P

Filed Under: Strategies

About the Author: First found out about options in 1995.From the arcane magazine Exchange and Mart! First trade- a covered call on VOD in 1999. Made 10%,VOD almost doubled. That's when I realised I was not a good trader,and I was forgiven thanks to the amazing world of exchange traded options

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  2. Jennifer says:

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    • Terrapin Trader says:

      We cannot post every day but there is a lot of content that we hope people enjoy and understand. There is so much to learn in trading, yet I’m still a terrible trader!We love comments and hope we give real insights into the options world

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