Point and Figure Toolbox

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Equis and MetaStock are registered trademarks of Equis International. All other product names or services mentioned are trademarks or registered trademarks of their respective owners. This product is not a recommendation to buy or sell, but rather a guideline to interpreting the specified analysis methods. This information should only be used by investors who are aware of the risk inherent in securities trading. Equis International accepts no liability whatsoever for any loss arising from any use of this product or its contents.

Contents
Point and Figure Toolbox 3
Introduction................................................................................................................................3 A Word about Trading...............................................................................................................4 Quick start information ..............................................................................................................5 Getting your data........................................................................................................................5 Creating a Watchlist...................................................................................................................7 Looking for signals ..................................................................................................................10 Analyzing the chart ..................................................................................................................11

What is Point and Figure?

15

How Does This Help Time-Oriented Charting? ......................................................................18

Point and Figure Patterns

19

Double Top ..............................................................................................................................19 Double Bottom.........................................................................................................................21 Bullish Signal...........................................................................................................................21 Bearish Signal ..........................................................................................................................22 Triple Top ................................................................................................................................23 Triple Bottom...........................................................................................................................24 Triangles ..................................................................................................................................25 Bearish Signal Reversed ..........................................................................................................27

Point and Figure Trendlines How to Use the Point and Figure Tools

29 31

The Indicators ..........................................................................................................................31 The Explorations......................................................................................................................38 The Expert Advisors ................................................................................................................40 The System Tests .....................................................................................................................41

How to Write Your Own Point and Figure Formulas

43

Current column ........................................................................................................................44 Column change ........................................................................................................................44 Current box ..............................................................................................................................45
Contents • i

.......................................................................Trend direction.............................45 Resistance.........................................................................46 Support.......................................................................................46 ii • Contents ............................................................................................................................

it provides a pattern recognition trading system and plots support and resistance levels. This chart style. Anyone can read and modify them. Further. and experts. such as changing the box size to be used. It should be noted that the formulas and this manual were written with a bias toward stocks. Also included is a pair of indicators to plot true 45 degree trendlines on Point and Figure charts. had no corresponding function commands. at the end of this manual is a complete explanation of the toolbox’s formula functions’ syntax. Most notably. Steven Dorsey’s book is an excellent source. Point and Figure Toolbox • 3 . However. opening the door for anyone to write formulas for Point and Figure analysis. However. Some minor editing changes may be needed. Whether you use the functions to write your own formulas. The Point and Figure Toolbox was designed to add this capability to MetaStock. this toolbox will help you in your trading decisions. which ignores time. or just use the pattern trading system that is provided.Point and Figure Toolbox Introduction MetaStock has had the ability to display Point and Figure charts since its early DOS versions. explorations. they will work just as well with futures. The most visible part of this toolbox is a group of indicators. All these formulas are open. For a more in depth study of Point and Figure. system tests. The Point and Figure patterns used in this toolbox were taken from the book by Steven Dorsey: Point and Figure Charting. it has not been possible to do any formula based analysis of these charts. This makes it a true toolbox. All these tools display accurately on time based charts as well.

stops should always be used. It is incumbent upon the user to evaluate each signal and decide for himself if any of the signals are worthy of a trade. The author of this toolbox does not make any promises on the performance of this system. 4 • Point and Figure Toolbox . It is the individual user’s responsibility to decide how to place these stops. When a trade is entered. the user of this toolbox has the final say in any trade. The signals are provided because they are ones generally used by a Point and Figure chartist. Everyone has their own ideas of appropriate risk and to what degree they need to protect their trades. However.A Word about Trading This toolbox has a pattern trading system which gives buy and sell signals. please consult your broker or a financial advisor. These signals are intended as alerts that a possible trading opportunity exists. If you feel you need advice in this area. Neither the system tests nor the expert advisors with this toolbox have stops coded into them.

please start here. In the File menu. Getting your data In version 9. Click on the Look-up button to get the following window: Point and Figure Toolbox • 5 . Start The DownLoader.Quick start information If you can’t wait to get started. the following steps describe how to create local data files and update them. the steps below will show you how to begin using the system. select New and then Security. The time will be well spent. If you do not already have local data.0 allows 6000 securities per folder. This is a reprise of the information in The DownLoader manual and assumes you are signed up with a data provider supported by The DownLoader. 2. To get the most out of this toolbox. we will only make files for the S&P 500.0 of MetaStock. 1. please examine the rest of this manual. explorations and system tests will run substantially faster on local data than on data accessed through the Internet. Therefore. However. For this quick start. you can create data files for as many securities as you would like. MetaStock version 9. you do not need to store your data on your hard drive. You should see a window like the following: From here.

Click OK. 11. Your data files have 6 • Point and Figure Toolbox . Make sure the Type is set to Stocks – Common. use “C:\MetaStock Data\S&P 500”. This will return you to the main Downloader screen.3. Set the First Date to how far back you want to see historical data. Change Group to S & P 500 Delete any text in the search field Click Select All Click OK You now return to the New Security window. 7. 4. 5. which should now have (MULTIPLE) displayed in three of the fields: 8. 6. 9. Set the top line (the folder field) to where you would like the data stored. Make sure the periodicity is set to Daily. If you have no preference. 10. It is recommended you use at least 500 records (about 2 years). This will store enough data for most securities to show several columns of Point and Figure data.

but currently have no data in them. log on to the Internet now. If you are not currently connected to the Internet. To get the data: 12. A popular Point and Figure method narrows this definition to apply only when the security’s price is between 20 and 100. Select your data Vendor and click OK When the download is finished. select Download Prices. On the left hand side. then the plus in front of your C drive.been made. click the plus in front of My Computer. Click the plus in front of MetaStock Data 16. If you saved the new securities in the suggested folder then: 15. Creating a Watchlist The most common Point and Figure charts use a box size of 1 and a reversal amount of 3. In the Tools menu. close the collection report and then close The DownLoader. This will bring up the Select Securities screen: 14. Click the folder labeled SP 500 and then click the button labeled Add. 13. You should see the folders on your hard drive. Point and Figure Toolbox • 7 . Click OK to go to the Vendor Selection Screen 18. The folder is now listed on the right side 17.

This brings up the Select Security screen: The steps to create a watchlist are listed below: 3. 8 • Point and Figure Toolbox . This opens a window similar to the Open dialog.In keeping with this. select The Explorer Highlight P & F Watchlist Maker and click Explore. at least 500 records of data at least 5 columns in a Point and Figure chart the lowest price is at least 25 the highest price is no more than 100 Open MetaStock and in the Tools menu. The exact requirements it looks for are: • • • • 1. the P & F Watchlist Maker is an exploration designed to identify the securities Point and Figure will work best with. Click the Add Securities button. 2.

5. These securities can be saved to Favorites for easier access. 9. Click OK to start the exploration. 1. click the Reports button. Click Open.4. Point and Figure Toolbox • 9 . Select the first security. 7. You are returned to the Select Security window and all the securities from the selected folder are listed. go back to Add Securities and select them as well. 8. When the exploration is finished. this will be C:\MetaStock Data\ SP 500 In the Tools menu. 10. If you followed the steps in Getting Your Data. click Select All. If you have any other folders you would like to include. Select Local Data on the left side of the dialog Browse to the folder containing the data you wish to use. 6.

4. 2. 3. 3. Right-click on one of the highlighted securities and then leftclick on “Add to Favorites” in the pop up menu. However. Select P & F Pattern Search and click Explore. the selection of the securities to use is easier: 1. Click OK to start the exploration. click on the last security (they should all be highlighted now). Click Open. Open MetaStock and in the Tools menu. Use the scroll bar to move to the bottom of the list While holding the shift key. after running the watchlist maker and saving the watchlist. In the Tools menu. you will get a report similar to the one below: 10 • Point and Figure Toolbox . 4. click Select All. When the exploration finishes. 5.2. Looking for signals The same procedure used to create the watchlist is also used to find which securities have just completed one of the patterns identified by the trading system. Select Favorites from the left side of the dialog. 7. 6. Click the Add Securities button. select The Explorer.

it is not uncommon to see a security with non-zero values in several columns. Point and Figure Patterns. you can sort for long or short signals. Below is a bar chart of Mettler Toledo. After opening the chart. Point and Figure Toolbox • 11 . the P&F Support Trendline and the P&F Resistance Trendline were plotted in the same inner window as the prices. the final step is to examine the chart. A zero in a column means that pattern was not found for that security. The exploration shown above says it just had a double top and a bullish signal pattern. For more information about these patterns. Analyzing the chart After you have finished running an exploration.A “-1” means a sell short signal was generated. The P&F Short Commentary expert was also attached to the chart. A “1” means a buy signal was found. As some patterns are part of other patterns. later in this manual. By clicking on the column headings. please refer to the section.

the current bullish signal pattern on the rally supports the previous signal. two bullish signal patterns have formed during this securities climb from a low of 25 to its current price of 39. 12 • Point and Figure Toolbox . Finally. a third bullish signal pattern has just occurred. Since then. In August 2003. the security broke through the P&F Resistance Trendline with a move a large enough to change the overall trend to Bullish. here is the same data in a Point and Figure chart. the current trend has shown the ability to exceed this resistance. This was in conjunction with a bullish signal pattern. However. Even though this pattern failed to move higher.A double top pattern back in November 2002 marks the beginning of an uptrend. On the last bar. The current closing price is above the half-way point of the channel formed by the support and resistance trendlines. This does not leave much room for further price movement before resistance is encountered.

Analyzing the sector or industry group this security belongs to. You can also seek confirmation of the signal by: • • • • • Plotting other indicators on the bar chart. Point and Figure Toolbox • 13 . Looking at the chart using candlesticks or another price style. you would need to make the final decision. This shows the same uptrend but started a little earlier. Analyzing the market as a whole. At this point.The support and resistance trendlines looked choppy on this chart because downtrend is barely established before it is being reversed. Changing the chart to weekly or monthly to look at the longterm price trends. If you are satisfied. you can take or reject the trade based on just this information. Therefore. There are several indications that this is a good signal and one caution of the nearby resistance trendline. they were replaced with the P&F 45 Up indicator.

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O’s are drawn in another column. Assume a security has a price of $50. If you change either one. To better understand how Point and Figure is drawn. if not longer. another X will be placed in the same column. The box size is the amount the price must move before a new X or O is drawn on the chart. The reversal amount is how many boxes the price must move against the current direction to trigger a reversal. The price movement from one value to another might be done in a day or in a year. What is Point and Figure? • 15 . This steady advance to the right is not affected by time. As supply begins to outpace the demand. In its most basic form. the movement will be drawn in a single column. If the price moves to 51. About the middle of the page. As long as the movement does not retrace far enough to trigger a reversal. As the price moves back and forth. both of these values are set when the chart is drawn.What is Point and Figure? Point and Figure has been around for at least a century. start with a normal piece of graph paper. The key values in Point and Figure are the box size and the reversal amount. For this example. In MetaStock. Put an X in this box. columns are added to the right side of the chart. the chart can look dramatically different. let each box represent $1. right above the previous X. it is a graphical depiction of supply and demand. assign one box the value of 50. X’s are marked as prices move up to denote increasing demand.

When this occurs. 16 • What is Point and Figure? . 53. This means the price must move 3 boxes before a single O can be drawn.75. Therefore. in the example with an X in box 55. only one more X is placed in this column. an O is drawn in boxes 54. an X can not be placed in the 53 box. the column will have 6 X’s in it. Now the price may begin to fall. the price must fall to 52 or less to trigger a reversal.If the price then moves to 52. we will use a reversal amount of 3. Since the price did move a full $1 from 52 to 53. One more aspect when counting downward: a value of $52. If this trend continues till the price reaches $55. and 52.25. In this example. This X represents a move to 52.50 is read as being in box 53.

the chart will plot the extent of each move. a new column is always started to the right of the current column and offset by one box from the previous column. the next column of X’s would begin in the 48 box. A further example of this is shown below. levels of support and resistance can be identified. This is why the previous example started drawing O’s in the 54 box instead of starting in the 52 box. What is Point and Figure? • 17 . As the prices move up and down. By watching for places where the prices repeatedly reverse. If the prices were to fall to $47 before starting upward again.Please note.

These mathematically precise definitions allow for: • • • • Easier referencing in formulas Explorations looking for the patterns Trends to be defined by the relationship of the prices to the support and resistance levels Multiple scenarios in system study and development. Unlike bar chart patterns. Point and Figure charts have their own pattern formations. A column will be a set amount higher or lower than a previous column or columns. Point and Figure patterns are precise. they are easily defined and easily recognized. the exact values would differ and no two would be exactly alike. which use approximations for retracements and percentage moves. Additionally. With Point and Figure. Ten people can look at a chart and plot ten different levels of support and resistance. these levels become much clearer. have differences. while similar to the bar chart patterns of the same name. Again. These patterns.How Does This Help Time-Oriented Charting? Support and resistance levels have always been subject to interpretation. 18 • What is Point and Figure? . While there would almost definitely be places they agreed on.

the expert advisors place a buy or sell arrow on the bar which finishes the pattern. The actual pattern is not highlighted or otherwise marked on the chart. Point and Figure Patterns • 19 . This is a bullish signal as the prices have just broken a level of resistance. the descriptions below should help you identify them. a double top is defined as a column of X’s rising to the same level as the previous column of X’s and then exceeding it. Double Top In Point and Figure.Point and Figure Patterns This toolbox was written to search for nine specific patterns: • • • • • • • • • Double Top Double Bottom Bullish Signal Bearish Signal Triple Top Triple Bottom Bullish Triangle Bearish Triangle Bearish Signal Reversed When found. However.

Looking at the chart. 20 • Point and Figure Patterns . In practice. When they reached the level at which they stalled the last time. but stops are especially important when trading with this pattern. this signal is very common and does not always yield good results. you will see that the prices climbed to a certain value and then stalled. The implication is that prices should continue moving upward. They fell back and then started to climb again. Securities forming this pattern should not be ignored. the prices continued to climb higher.

Do not ignore this pattern. this signal is very common and does not always signal good trades. When they reached the level at which they stopped last time. Bullish Signal The bullish signal is a special form of the double top pattern. the prices continued to drop. This is a bearish signal as the prices have just broken through their previous support. In addition to the second column of X’s rising above the first. They rallied and climbed for a while and then started to fall again. the column of O’s between them has to find support at a higher level than the previous column of O’s. you will see that the prices dropped to some value and stopped. The implication is that prices should continue falling. Point and Figure Patterns • 21 . In practice.Double Bottom A double bottom is created when a column of O’s falls to the same level as the previous column of O’s and then drops even lower. but look for confirmation signals and check your stops. Looking at the chart.

As with all trades. stops are important. the second column of O’s must fall below the first. the prices fell to some level and established support. Rising again. 22 • Point and Figure Patterns . support was found at a higher level than was previously established. this pattern has some additional confirmation built in. unlike double tops. This pattern is fairly common and is a better signal than normal double tops. they climbed past the resistance previously encountered. Bearish Signal The bearish signal is a special form of the double bottom pattern. Like the standard double top. the prices moved upward until they encountered resistance. However. the second column of X’s must not rise as high as the previous column of X’s. As they rebounded. In addition. This pattern incorporates rising lows with higher highs.Looking at a bar chart. Like double bottoms. When they fell. the implication is that prices should continue rising.

Occasionally. the prices climbed until resistance pushed them back down. resistance was found sooner and the prices were forced downward again. the prices encountered support and began to move upward again. The last three columns of X’s are examined. in which case the first column of O’s will reach lower than the second. the previous support was insufficient and they continued to fall. Triple Top The triple top pattern further refines the criteria of the double top.Looking at a bar chart. the bullish signal pattern is contained inside the triple top pattern. Resistance is pushing the prices lower at the same time as the previous support level fails. This time. Set stops and watch your exit conditions. As they fell. The first and second must rise to the same point and the third must extend past them. The implied downward movement of the prices should continue. As they fell. Point and Figure Patterns • 23 . Like the Bullish Signal. this pattern includes a confirmation of the movement.

be sure to place appropriate stops. 24 • Point and Figure Patterns . the prices would rise twice.Looking at the chart. the more significant the breakthrough is. The first and second must find support at the same level. Occasionally. Theoretically. only to encounter resistance. However. This would require the most recent column of X’s to have a lower high than the previous column. the prices would pierce this resistance and continue upward. The more strongly this is established. when a triple top occurs. The last column must fail to find the same support and move further downward. these additional columns only serve to further reenforce the level of resistance. That said. a pattern longer than a triple top is rarely seen. Still. if an inspection of the chart shows the resistance level to have been around for more than this pattern identifies. it should serve to further verify the signal. This pattern is a strong buy signal as the resistance level is more firmly established. The last three columns of O’s are compared. there could be quadruple tops or even longer patterns. When they rose the third time. Practically. the bearish signal pattern is incorporated into the triple bottom pattern. Triple Bottom The triple bottom formation is an extended version of the double bottom pattern.

When they move lower a third time. rise and then fall to the same support level. It consists of both X and O columns shrinking until the prices finally break out. the signal is further validated. After establishing support and confirming it in the previous two columns of O’s. Still. do not neglect setting appropriate stops. its failure to hold on the third approach is much more significant.Looking at a bar chart. If an examination of the chart shows this support level to have been set even earlier. the prices would find support at some level. Triangles This pattern requires 5 columns to form. it underscores the importance of this pattern. Notice how the second X column encounters resistance before the previous column did. Below is an example of a bullish triangle. This narrowing continues until the last X column forms a bullish signal pattern by breaking out of the triangle pattern. this support would be insufficient and the prices would continue to fall. The second O column found support above the first. This is strong sell signal. but can be longer. Point and Figure Patterns • 25 . If the bearish signal is also represented.

The highs and lows of the price movements would draw closer and closer. Looking at a bar chart. the narrowing of the support and resistance levels could be observed. Notice the second O column finds support sooner. In the same way. the stronger the breakout should be.The bearish triangle is shown below for comparison. the second X column finds resistance before the first. This closing of competing support and resistance levels forms a pressure cooker in which the prices eventually explode outward. Its pattern is nearly identical. This pattern is completed when the bearish signal forms as the support indicated by the second column of O’s is broken. The tighter the apex of the triangle. Set stops just in case unexpected news or other actions negate the strength of this move. 26 • Point and Figure Patterns . This is sometimes referred to as congestion. but breakouts from triangles usually have exceptional strength behind them. It is not within the scope of this toolbox to predict which way the price will go.

but this signal is usually worth waiting for. Point and Figure Patterns • 27 . When the double top is formed. As the prices move downward. Then a double top is made off the column of X’s in the last bearish signal. The strength of this pattern is in the sudden and strong movement against the prevailing trend. Then. This pattern can be watched as it forms. expect the prices to move. they suddenly surge upward breaking through the last resistance level.Bearish Signal Reversed This is the longest pattern included in this toolbox. a second and then a third bearish signal pattern are formed. The prices are consistently making lower lows and lower highs. Each bearish signal is in sequence with the last bar of one being the first bar of the next. the consecutive bearish signals only serve to confirm each other and the prevailing trend. It is not so much one pattern as it is the combination of four separate patterns. Set stops to lock in your profits and to protect against sudden reversals. Until the double top is formed. The bearish signal reversed starts with a normal bearish signal.

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The line is then drawn connecting these two points. a trendline is drawn between any two points.Point and Figure Trendlines Trendlines are a standard feature of technical analysis. with Point and Figure. For illustration purposes. Point and Figure Trendlines • 29 . you can get both the short-term trend from the column and the long-term trend from the trendlines. When the prices break through a trendline. This toolbox addresses the forty-five degree trendlines. a new trend is starting and the lines are then redrawn to reflect the new trend. below is a sample chart using # where the line would be drawn: A matching trendline is usually drawn on the opposite side of the column. The next point is found by moving over one column and up or down one box. Typically. Therefore. They are used to identify trends and mark support and resistance levels. these are drawn by picking a peak or trough and starting the line in middle of the box just above or below that column. Point and Figure charts only use flat horizontal lines and fortyfive degree angle lines. This process is repeated for as many columns as the line is desired. On bar charts and other time-oriented price styles.

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{ setting data to 0 uses the High Low range } box:=1. which set the default values for the box size. you will see the following text: data:=0. The values after the equal sign can be changed and then saved. you could do so. threshold:=2.5. If you do. Do not delete or rename this indicator. This indicator contains several short lines of text. The formula would then look like this: How to Use the Point and Figure Tools • 31 .How to Use the Point and Figure Tools The Indicators ** P & F Values ** IMPORTANT: This indicator is very important to all Point and Figure Toolbox formulas. If this indicator is deleted or renamed. reversal amount. reversal:=3. if you wanted to change the box size from 1 to 0. For example. the other Point and Figure formulas will not work until it is restored. and the trendline threshold. you should edit this indicator. the data array to use. It is referenced by all other Point and Figure formulas. If you wish to adjust the Point and Figure parameters used by other toolbox formulas.

do not add this indicator to a chart as it will not plot anything. threshold:=2. If everything is entered correctly. 5. 2. 3. or the formula will no longer work correctly. { setting data to 0 uses the High Low range } box:=0. with no extra spaces before or after the name 4. In the formula window.data:=0. The value on the data line is the price data using in calculating the Point and Figure formulas. Click OK. The other indicators and their uses are described below. the indicator editor will close. If this is different. Open the Indicator Builder Click New Type in the following text for the name: ** P & F Values ** This must be entered exactly as listed above. 32 • How to Use the Point and Figure Tools . type in the five lines of code listed above. If this indicator is deleted or otherwise lost. This should be set to the same setting selected in the Point and Figure properties window. Please note that the semicolon at the end of the line was not changed. it can be restored by manually re-typing it: 1. Capitalization does not matter here.5. reversal:=3. Just make sure the punctuation is exact. the formulas will not match the MetaStock chart Finally. This semicolon is required by the MetaStock formula language and cannot be removed.

It is normally used with the P & F Support Trendline indicator. A trend requires at least 5 columns of Point and Figure data. this means that after a breakout. this indicator is not needed. The support and resistance trendline indicators require one more comment. P & F Support Trendline This plots the support level for the Point and Figure chart. The indicator adjusts to reflect trendline breakouts. It is included as an alternate way to identify these switching points. A breakout requires the prices to move the threshold amount outside the current trend channel. but the stated one is predominant. all dates within a given column must have the same value. For this indicator to plot correctly in a Point and Figure chart. P & F Trend This indicator doesn’t plot anything until the toolbox detects a trend. It automatically adjusts itself to changes in trends or breakouts of the current trend channels. will have the support and resistance lines redrawn. this adjustment is more dramatic. P & F New Column This indicator plots a flat line with a spike where a Point and Figure chart has switched to a new column. On a Point and Figure chart. This is useful in overlaying a Point and Figure analysis on other price styles. Once a trend is detected. this indicator graphically shows the current value of the box last drawn on a Point and Figure chart. Other arguments for this action exist. If either of the Point and Figure Expert Advisors is attached.P & F Current Box When plotted in a chart. The new level of support and resistance is drawn for all dates contained within the column. the formula plots either a 1 for a bullish trend. This rule necessitates the re-drawing of the trendline. On other price styles. or a -1 for a How to Use the Point and Figure Tools • 33 . the indicator will position itself at the high and low of the column that triggered the breakout. It is intended to be used in conjunction with the P & F Resistance Trendline indicator. P & F Resistance Trendline This plots the resistance level for the Point and Figure chart. Warning of this change is mentioned here to prevent any confusion when this happens. This means that the past bars. It can also be used to gauge how close the prices are to a reversal. These indicators adjust to reflect breakouts. A breakout requires the prices to move the threshold amount outside the current trend channel. potentially weeks of data.

the trendline will be plotted in your chart. Change the chart to a Point and Figure chart Making sure the chart style properties match the values in the “** P & F Values **” indicator. looking something like the chart below. 9. 34 • How to Use the Point and Figure Tools . Just as they adjust for breakouts. 8. Locate the place where you want the trendline to start and position your mouse over that column. usually 1 box above or below those listed in the Data Window. Now plot the indicator in the same window as the prices. In the first three boxes. you will get the following window: 7. please use the following procedure: 1. this indicator also changes the recent historical values to reflect a change in the trend. 5. 4. 6. When it is plotted in your chart. enter the date from the starting column. Set the value of the box you want the line to start at. This trend calculation is based on the breakouts of the support and resistance indicators. select Data Window). Clicking OK. In the data window. P & F 45 Down For this indicator to work properly. 3.bearish trend. note the date it displays and the box values. 2. Open the Data Window (in the View menu.

you can change the chart back to your chosen price style.It may take some practice to correctly anchor the starting point. In a time-based chart. The trendline will be carried over to the new price chart and plot the values corresponding to the Point and Figure chart. this will resemble a series of stair steps as seen in the chart below. After the trendline is plotted in the chart and looks correct on the Point and Figure chart. How to Use the Point and Figure Tools • 35 .

note the date it displays and the box values. 4.P & F 45 Up For this indicator to work properly. In the data window. Change the chart to a Point and Figure chart Making sure the chart style properties match the values in the “** P & F Values **” indicator. Locate the place where you want the trendline to start and position your mouse over that column. Open the Data Window (in the View menu. 3. Now plot the indicator in the same window as the prices. 2. When it is plotted in your chart. select Data Window). please use the following procedure: 1. 5. 6. you get the following window: 36 • How to Use the Point and Figure Tools .

The How to Use the Point and Figure Tools • 37 . After the trendline is plotted in the chart and looks correct on the Point and Figure chart. enter the date from the starting column. usually 1 box above or below those listed in the Data Window. you can change the chart back to your chosen price style. It may take some practice to correctly anchor the starting point. Clicking OK.7. 9. looking something like the chart below. In the first three boxes. Set the value of the box you want the line to start at. 8. the trendline will be plotted in your chart.

The Explorations Four explorations are provided for Point and Figure trading. The Point and Figure Toolbox does not require a set number of records. the list shows a 1 in the respective column for buy signals and a -1 for sell signals. this will resemble a series of stair steps. The first four report bullish (buy) and bearish (sell short) versions of the signal. Since Point and Figure is not time based. If a 38 • How to Use the Point and Figure Tools . In a time based chart. P & F Pattern Search This exploration is designed to scan through a group of securities and return a list of those which have just formed a new pattern. The last column is always a buy signal and will display a 1 when this is true. the explorations provided with this toolbox will perform better. if you load at least 500 records. If either is found. it is not possible to say how much data will be needed for a chart to show several columns of data. Please note. The report is divided into five columns. However.trendline will be carried over to the new price chart and plot the values appropriate to the Point and Figure chart.

Change the number 10 to the desired number of trading days you want included in this scan. If a longer lookback period is desired. this exploration can be edited and the number changed. Make the same changes to columns C. click the tab for column B and repeat the process. To change the lookback. click OK. Column A is selected by default. P & F Recent Patterns This exploration gives the same report as the P & F Pattern Search exploration. change this line to: days:=5. After making the change in column A. The modified exploration is now ready for use. Make sure the semicolon remains at the end of the line. After changing column E. The difference is that this exploration looks for any signal within the last 10 trading days. For example. How to Use the Point and Figure Tools • 39 . click on this exploration and then click Edit. it shows a 0. D. Below is a sample report from this exploration. If all the changes were made correctly. open The Explorer.column does not have a buy or sell signal for its pattern. if you want the exploration to only look at 5 days. and E. the Exploration Editor will close. The first line in each of the columns A through E is the text: days:=10. The lower half of the Explorer Editor has seven tabs labeled columns A through F and Filter.

and a commentary gives some suggestions on how to approach these signals. The expert colors the price bars blue or red to show where a point a figure chart would be drawing a column of X’s or O’s. Many Point and Figure chartists believe a box size of 1 is only valid when the prices are between 20 and 100.P & F Status Report This exploration is designed to scan through a list of securities and report the current column. P & F Watchlist Maker This exploration allows you to refine your list of securities to increase the validity of the Point and Figure signals. then the box size should be adjusted up or down to compensate and retain valid signals. and the support and resistance values of that trend. However. 40 • How to Use the Point and Figure Tools . Since prices tend to fall faster than they rise. P & F Short Commentary This Expert Advisor colors the price bars and adds symbols to charts the same as the P & F Full Commentary expert. The commentary is calculation intensive and can dramatically slow down a system when used on a live chart. Symbols are placed on the chart to show the completion of Point and Figure patterns. an extra buffer of 5 points was added to the bottom range. etc). It is designed to be used on time based chart (Open/High/Low/Close bars. This exploration also filters out securities with less than 500 periods and whose Point and Figure chart contains less than 5 columns. Since MetaStock can only use 1 box size for the whole chart. This Expert Advisor is not intended to be used with a real-time chart. the trend (if any). this exploration looks for securities whose price is between 25 and 100. If a security’s price moves outside that range. The resulting list contains securities whose price action is sufficient to generate the buy and sell patterns. its commentary is just a status screen and makes no mention of Point and Figure patterns. the current box. Both the column and the trend are identified by either a 1 (if the security is in an up trend or an X column) or a -1 (when the security is in a down trend or an O column). The Expert Advisors P & F Full Commentary This is the main Expert Advisor provided with the Point and Figure toolbox. candlesticks.

long trades are held until the price moves to the resistance line and then start to fall. P & F Pattern System This system searches for triple tops.This allows it to display the commentary significantly faster. the system tests provided with this toolbox will be more likely to find the Point and Figure patterns. you can edit the “** P & F Values **” indicator and input the numbers derived by the optimization. This would change all the explorations. However. The System Tests The Point and Figure Toolbox does not require a set number of records. experts. These patterns are more common and the moves are often shorter. Short trades are held until the prices have dropped near to the support line and then start to climb. it is the same. except it optimizes the box size and reversal amount. a trade is taken and then held until the prices draw near the appropriate trend channel line and then pull back. bearish and bullish triangles. In all other respects. When one of these is found. and indicators to use these new values. How to Use the Point and Figure Tools • 41 . If the results of the optimization over a large group of stocks are to your liking. triple bottoms. bearish and bullish signals. The double top and double bottom patterns were not included in this test. That is. Since Point and Figure is not time based. P & F Pattern System w/ opt This system is the same as the P & F Pattern System. if you load at least 500 records. and bearish signal reversed patterns. it is not possible to say how much data will be needed for a chart to show several columns of data.

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High. Low. These values are summarized in the following table: How to Write Your Own Point and Figure Formulas • 43 . The format is the same for all six functions: ExtFml("PointFig. The second set of three are a calculation of the current support and resistance trendlines and the direction of the trend. Enter either the short or long name. RETURN VALUE – Identifies which of the six Point and Figure values you wish to use. the value of the current box in the current column. such as the Stochastic Oscillator.pointfig". Point and Figure can also be calculated on the High – Low range. RETURN VALUE ) DATA ARRAY – The data the Point and Figure chart is to be calculated on. BOX SIZE – The box size used in creating the Point and Figure chart. REVERSAL AMOUNT. DATA ARRAY. or Closing price. This can be any positive number. set the data value to 0. If you want to use the High – Low range.How to Write Your Own Point and Figure Formulas The Point and Figure Toolbox provided with MetaStock 9. THRESHOLD VALUE – The number of boxes the trendlines must be penetrated by to trigger a trendline breakout. using the high when the price is going up and the low when the price is falling.0 allows a formula to get one of six different values about Point and Figure charts. This can be any positive integer. The function will return the corresponding value. Normally this will be the Open. and whether or not a new column just started. BOX SIZE. All six queries can be done in any MetaStock formula and can be combined to create practically any Point and Figure based formula desired. It should also be noted that any other value can be used here. THRESHOLD VALUE. REVERSAL AMOUNT – The number of boxes required for a reversal. a moving average or even some other security’s data. This can be any positive integer. The first three are factual values: the current column (X or O).

"REVERSAL")).thresh.box."BOX")). ExtFml("PointFig.c ol) This returns either a 1 or a -1 depending on which column the chart is currently displaying. 44 • How to Write Your Own Point and Figure Formulas . reva:= LastValue(FmlVar("** P & F Values **". If the Point and Figure chart is currently in an X column of ascending prices. this returns a 1.reva."THRESHOLD")). box:= LastValue(FmlVar("** P & F Values **". reva:= LastValue(FmlVar("** P & F Values **". If the chart is in an O column of descending prices. thresh:=LastValue(FmlVar("** P & F Values **". box:= LastValue(FmlVar("** P & F Values **". Column change Formula: data:= FmlVar("** P & F Values **"."BOX"))."DATA")."THRESHOLD")).The individual return values are further explained below. Current column Formula: data:= FmlVar("** P & F Values **".pointfig".data."REVERSAL"))."DATA"). Each example shows the formula to get the Point and Figure information for a chart created using the values in the “** P & F Values **” indicator. this function returns a -1. thresh:=LastValue(FmlVar("** P & F Values **".

The box is a multiple of the box size."THRESHOLD")). 6.reva. ExtFml("PointFig."REVERSAL")). 4.data. Current box Formula: data:= FmlVar("** P & F Values **". reva:= LastValue(FmlVar("** P & F Values **".pointfig".t nd) Trend is a general term used to describe a prevailing direction of the How to Write Your Own Point and Figure Formulas • 45 . thresh:=LastValue(FmlVar("** P & F Values **".ExtFml("PointFig."DATA"). it is always calculated as being in a specific box. etc)."REVERSAL")).pointfig". This function returns the value of that box. this function returns a 1. However.: 2.thresh. on the period that triggers a reversal.thresh.e.reva. ExtFml("PointFig.box.b ox) No matter what data is charted.box.thresh. 8.r ev) This function normally just returns the value zero.data. reva:= LastValue(FmlVar("** P & F Values **". box:= LastValue(FmlVar("** P & F Values **"."THRESHOLD")). (i. the prices are always in a box whose value is evenly divisible by 2.box.data. thresh:=LastValue(FmlVar("** P & F Values **".pointfig"."DATA"). box:= LastValue(FmlVar("** P & F Values **". Trend direction Formula: data:= FmlVar("** P & F Values **"."BOX"))."BOX")). This means that if you use a box size of 2.reva.

This function attempts to detect and quantify these moves. This returns the value of the box for the bottom line of the trendline 46 • How to Write Your Own Point and Figure Formulas . and a -1 if these lines are trending down.t op)+(."THRESHOLD")). ExtFml("PointFig. Resistance Formula: data:= FmlVar("** P & F Values **".data.box."BOX")). reva:= LastValue(FmlVar("** P & F Values **".pointfig". reva:= LastValue(FmlVar("** P & F Values **"."DATA"). a general up or down move that persists over several columns is more significant.b ot)-(1. thresh:=LastValue(FmlVar("** P & F Values **".5*box).prices. box:= LastValue(FmlVar("** P & F Values **". It returns a 1 if the automatic support and resistance lines are trending up. box:= LastValue(FmlVar("** P & F Values **". The columns of a Point and Figure chart describe the short term price moves."REVERSAL")). Support Formula: data:= FmlVar("** P & F Values **"."THRESHOLD")). thresh:=LastValue(FmlVar("** P & F Values **".reva.thresh. The formula adds an extra half box size for display purposes in Point and Figure charts.thresh. The extra half box size results in the line being drawn through the middle of the box above the X columns instead of the top edge of the column."DATA"). This returns the value of the box for the top line of the trendline channel.data. or trend. However.pointfig".5*box)."REVERSAL")).reva.box. ExtFml("PointFig."BOX")).

channel. The formula subtracts one and one half box sizes for display purposes in Point and Figure charts. This shift moves the line to the middle of the box below the O columns instead of the top edge of the column. • 47 .