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 ii • Contents ......46 Support.....................................................................................

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

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

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. Click on the Look-up button to get the following window: Point and Figure Toolbox • 5 . please start here. For this quick start. Getting your data In version 9. The time will be well spent. 1. However. select New and then Security. you do not need to store your data on your hard drive. Therefore. In the File menu. we will only make files for the S&P 500. 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. you can create data files for as many securities as you would like. If you do not already have local data.0 of MetaStock. the following steps describe how to create local data files and update them.0 allows 6000 securities per folder.Quick start information If you can’t wait to get started. the steps below will show you how to begin using the system. 2. MetaStock version 9. Start The DownLoader. To get the most out of this toolbox. You should see a window like the following: From here.

10. 9. 4. Your data files have 6 • Point and Figure Toolbox . 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.3. use “C:\MetaStock Data\S&P 500”. This will return you to the main Downloader screen. Set the First Date to how far back you want to see historical data. 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. 7. 11. If you have no preference. which should now have (MULTIPLE) displayed in three of the fields: 8. Set the top line (the folder field) to where you would like the data stored. Click OK. 6. Make sure the periodicity is set to Daily. Make sure the Type is set to Stocks – Common. 5.

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

8 • Point and Figure Toolbox .In keeping with this. The exact requirements it looks for are: • • • • 1. 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. 2. Click the Add Securities button. select The Explorer Highlight P & F Watchlist Maker and click Explore. the P & F Watchlist Maker is an exploration designed to identify the securities Point and Figure will work best with. This brings up the Select Security screen: The steps to create a watchlist are listed below: 3. This opens a window similar to the Open dialog.

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

after running the watchlist maker and saving the watchlist. 3. Select Favorites from the left side of the dialog. 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. Click Open. However. 7.2. Click OK to start the exploration. click on the last security (they should all be highlighted now). Use the scroll bar to move to the bottom of the list While holding the shift key. 3. 6. When the exploration finishes. 2. 4. Select P & F Pattern Search and click Explore. In the Tools menu. Right-click on one of the highlighted securities and then leftclick on “Add to Favorites” in the pop up menu. 5. click Select All. Open MetaStock and in the Tools menu. 4. Click the Add Securities button. the selection of the securities to use is easier: 1. select The Explorer. you will get a report similar to the one below: 10 • Point and Figure Toolbox .

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

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

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

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

Since the price did move a full $1 from 52 to 53. and 52. One more aspect when counting downward: a value of $52. only one more X is placed in this column. 16 • What is Point and Figure? . In this example. the column will have 6 X’s in it. When this occurs. This means the price must move 3 boxes before a single O can be drawn.25. Now the price may begin to fall.If the price then moves to 52.75. 53. we will use a reversal amount of 3. an X can not be placed in the 53 box. If this trend continues till the price reaches $55. an O is drawn in boxes 54. This X represents a move to 52. the price must fall to 52 or less to trigger a reversal. in the example with an X in box 55.50 is read as being in box 53. Therefore.

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

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

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. This is a bullish signal as the prices have just broken a level of resistance. the descriptions below should help you identify them. the expert advisors place a buy or sell arrow on the bar which finishes the pattern. Point and Figure Patterns • 19 . Double Top In Point and Figure. The actual pattern is not highlighted or otherwise marked on the chart. 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. However.

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

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

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

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

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

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

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

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

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

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the data array to use. reversal amount. { setting data to 0 uses the High Low range } box:=1. you will see the following text: data:=0. The values after the equal sign can be changed and then saved. If you wish to adjust the Point and Figure parameters used by other toolbox formulas. 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. you could do so. you should edit this indicator. the other Point and Figure formulas will not work until it is restored. and the trendline threshold. reversal:=3.5. which set the default values for the box size. If you do. if you wanted to change the box size from 1 to 0. This indicator contains several short lines of text. It is referenced by all other Point and Figure formulas. Do not delete or rename this indicator. threshold:=2. For example.

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

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

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

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

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

After the trendline is plotted in the chart and looks correct on the Point and Figure chart. looking something like the chart below. you can change the chart back to your chosen price style. The How to Use the Point and Figure Tools • 37 . enter the date from the starting column. Set the value of the box you want the line to start at. 9. Clicking OK. In the first three boxes. the trendline will be plotted in your chart. usually 1 box above or below those listed in the Data Window. It may take some practice to correctly anchor the starting point. 8.7.

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

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

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

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

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

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

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

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

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.channel. • 47 .

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