Point&Figure Chart

Point&Figure Chart
Point and Figure Charts (P&F charts) are an old charting type that is independent of time.

P&F charts show two kinds of symbols. Depending on the price movement and range, a number of symbols are drawn. The time relation and trading volume are not taken into account.

Point and Figure charts are helpful for trend detection, as they show trends as well as easily identifiable resistance and support zones. There are also Equilla indicators for 45 degree trend lines and support resistance levels.

Trading Information in a P&F Chart

A P&F chart consists of columns of symbols of the same type.
  • Rising prices are drawn with crosses (also called Xs).
  • Falling prices are drawn with circles (also called Os).
In a P&F chart these symbols are called boxes and cover a certain price range known as the box size. A new symbol is added to a column once the price movement of the instrument exceeds the box size of the box in trend direction, i.e. in an X-column (rising prices) a new box is drawn when the prices reaches a value above the new box's price range. Movements below that value are ignored. This way, the box size determines how much the price movements are filtered. Large box sizes filter many movements. Small box sizes show movements better, but also have a smaller filter effect.

The reversal parameter of a P&F chart dictates by how many box sizes the price movement has to change in order to establish a new trend which also entails drawing a new column of the opposite type of boxes. For example: for a Reversal value of "3", after a breakout, the counter trend has to exceed three box sizes to change the trend in the chart. Please note that the Reversal parameter gives the number of boxes to be taken into account, not a fixed price value as for the related methods Kagi and Renko. Therefore, the price at which the trend change occurs in the chart is relative. Price movements that lead neither to a reversal nor to a new symbol of the current direction are ignored.

The time elapsed is unimportant for this kind of charting. The time axis is not linear.

Alternating months are displayed in different colors, e.g. black/red. The colors can be set in the properties. (The months are not relevant for the method, but are displayed for a better overview.)

General Chart Properties

When the chart is active, you can edit the chart properties in the toolbox, for example the history length, the axes and legends.

You can also Select the grid style Graph Paper in the Chart Properties if you want the boxes of a P&F chart to be enclosed by grid lines.

Content-Dependent Chart Settings

Boxsize modes

Point&Figure Properties
In the properties of the displayed instrument, you can find additional parameters. Besides the Standard Properties, you can find specific parameters for this chart type.

Instrument Properties

Boxsize Mode - Enter a method to calculate the box size
  • Constant price
  • Constant points
  • Percentage of close, close value on Base Date is used
  • Average True Range, values up to Base Date are used
  • Logarithmic, i.e. box size increases for rising prices, initial box size is based on the open value on Base Date
Boxsize - Dependent on the selected Boxsize Mode this value is interpreted as
  • Constant price: a price
  • Constant points: a number of points
  • Percentage of close: a percentage value
  • Average True Range: the period of the ATR, i.e. a weighting factor applied to the EMA
  • Logarithmic: the percentage by which box sizes increase for rising prices
  • For the percentage based values, note that the % sign is implied.

    Base Date - This property is used for Percentage of close, Average True Range and Logarithmic. If an invalid date is specified or the date is no longer available, it will be adjusted.

    Reversal - Enter the number of boxes to be taken into account for a trend reversal.

    1-Box reversal - If the reversal property is set to one, this property determines if one-box reversals are compressed into the next column (Standard option), or if a new column is always created (New Column option).

    High-Low - Select if boxes and reversals should be calculated against the high and low values instead of the close value.

    Initial Trend - Here you can choose how the to establish the initial trend. Possible methods are:
    • High-Low Range: At least reversal boxes must be spanned by the highest high and lowest low to establish a trend. If this happens on the first bar, the close value is compared to the midrange of high and low to determine if an X or O is drawn. If the trend is established on a later bar, the most recently updated extreme value (highest high or lowest low) determines whether the first column contains X or O. This will always draw at least reversal boxes in the first column.
    • High-Low Range (simplified): This is similar to High-Low Range, but establishes a trend on the first price movement, so it may start a column with just one box. (note: this mode was called Traditional in previous versions)
    • Close Range: This mode also requires reversal boxes to be spanned by the highest and lowest value, but only considers close prices. This will always draw at least reversal boxes in the first column. (note: this mode was called Smoothed in previous versions)
    • Two Box Method: This method compares the high and low prices of the first bar against high and low prices of subsequent bars. If the high values are found to be at least one box apart, Xs will be drawn. If this is not the case the lows are compared and if they are at least one box apart, Os will be drawn. This will always draw at least two boxes in the first column.
    P&F Properties

    Color Change - Specifies under which circumstances the colors alternate. This property is available in Tradesignal 7.3 and above.
    • Monthly: The color changes as soon as a new month starts.
    • Weekly: The color changes as soon as a new week starts.
    • Daily: The color changes as soon as a new day starts.
    • Hourly: The color changes as soon as a new hour starts.
    • Every Column: The color changes for every column. X columns are drawn using Color 1 and O columns are drawn using Color 2.
    Color 1 / Color 2 - Set the symbol colors for alternating months. The displayed symbols toggle between Color 1 and Color 2. In Tradesignal 7.3 and above the Color Change property controls how the colors alternate.

    Indicators on Point & Figure charts

    Indicators and strategies can be applied to a Point & Figure chart like any other chart type. The main issue to be aware of is how the values for Open, High, Low and Close are interpreted. The box value at the top and bottom of a column will determine the high and low respectively. The open will be equal to the low value for an X column and equal to the high for an O column. The close will be equal to the high value for an X column and equal to the low for an O column. An additional field called Midpoint is available for input to an indicator, this will be the value of the middle box in a column, or the mean value between the two middle boxes if a column has an even number of boxes.

    To apply a Simple Moving Average to a Point & Figure chart using the column Midpoint
    1. Drag and drop the indicator Moving Average Simple from the Indicator Toolbox onto the point and figure chart.
    2. Click on the moving average line in the chart (or the legend), to select the average.
    3. In the Property Inspector, locate the Price property for the moving average and change it to Midpoint.

    Links and Books

    Point and Figure Charts

    Point and Figure Tutorials

    The Complete Guide To Point-And-Figure Charting - H. Weber & K. Zieg

    The Definitive Guide to Point an Figure - J. Du Plessis

    The Essential Application for Forecasting and Tracking Market Prices - T.J. Dorsey