| Someone recently ask me why I use Point & Figure Charting over all
of the other forms of technical analysis. I think you can boil it down
to just a few salient points: simplicity and it works for the type of
trading and investing that I do. Point & Figure (P&F) charting is a
method of technical analysis that has been in use for more than 100
years. After a number of years on the shelf it’s once again gaining in
popularity. It’s probably one of the most unique charting systems that
you’ll ever encounter.
At first glance, a P&F chart looks like a real mess. “Gibberish" is a
good word that comes to mind. How in the world can anyone make sense out
of all of those “Xs" and “Os"?
I know the first time I looked at a P&F chart I couldn’t make heads
or tails out of it. To say that I was confused was an understatement.
After 30 minutes or so of study, I was hooked. And you will be too!
A P&F chart is nothing more than a picture of supply and demand.
Think back to Economics 101. What’s the first thing that we all learned?
Supply and Demand must be equal.
When demand for something is greater than the existing supply, prices
rise. On our chart rising prices are represented by a column of Xs.
When the supply of a particular item is greater than the demand for
it, prices fall. On our chart falling prices are represented by a column
of Os.
The chart is put together using alternating columns of Xs and Os.
This is just the ebb and flow of supply and demand.
Probably the most unique feature of the chart is how time is
depicted. It isn’t. Time is not a factor when it comes to supply and
demand. The direction changes when it changes.
Simplicity is the essence and beauty of P&F charting.
P& F charting offers a trader/investor several advantages:
1. Support and resistance levels are easily recognized
2. Trend lines are a virtual no-brainer. What is “is"
3. Chart patterns are easy to interpret
4. No noise. To me, this is one of the most important advantages.
Insignificant price movements have been eliminated. On a bar or
candlestick chart, irrelevant prices movements clog up the chart and
this “noise" can lead to a misinterpretation of the chart.
5. I like to post my charts by hand because it gives me a better
“feel" for what is going on in the market. Because of the type of
charting that I am doing, P&F charting allows me to follow a large
number of stocks, sectors and indices.
At the end of the day, you have to be comfortable with the system you
are using. I’ve been a P&F guy for about 30 years. Simple and Reliable –
it doesn’t get much better than that.
R.A. "Casey" Christy
The Stock Trading Advisor
R.A "Casey" Christy is a professional stock trader,
author and recognized authority on technical analysis.
His web site ( http://www.christyinvestments.com) contains a
wealth of information, articles and resources on
everything you'll ever need to know about trading
stocks. If you're really serious about making money in
the stock market, you need to learn to trade the way the
"pros" do. Article Source:
http://EzineArticles.com/?expert=R.A._Christy |
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