Point and Figure Toolbox

All Rights Reserved Copyright  2004 Printed in the U.S.A. Equis International, Inc. 90 South 400 West Suite 620 Salt Lake City, UT 84101

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

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

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

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

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

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

On the left hand side. Click the plus in front of MetaStock Data 16. In the Tools menu. To get the data: 12. Select your data Vendor and click OK When the download is finished. Point and Figure Toolbox • 7 . but currently have no data in them. Click OK to go to the Vendor Selection Screen 18. 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. close the collection report and then close The DownLoader. The folder is now listed on the right side 17. log on to the Internet now. select Download Prices. A popular Point and Figure method narrows this definition to apply only when the security’s price is between 20 and 100. Click the folder labeled SP 500 and then click the button labeled Add. 13. This will bring up the Select Securities screen: 14. You should see the folders on your hard drive. If you saved the new securities in the suggested folder then: 15.been made. click the plus in front of My Computer. then the plus in front of your C drive.

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

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

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. Click the Add Securities button. 3. Open MetaStock and in the Tools menu. 2. you will get a report similar to the one below: 10 • Point and Figure Toolbox . In the Tools menu. after running the watchlist maker and saving the watchlist. Select P & F Pattern Search and click Explore. the selection of the securities to use is easier: 1. When the exploration finishes. Select Favorites from the left side of the dialog. 4. 7. However. click Select All. click on the last security (they should all be highlighted now). 4. Use the scroll bar to move to the bottom of the list While holding the shift key. 6. Click Open. Right-click on one of the highlighted securities and then leftclick on “Add to Favorites” in the pop up menu. 5. select The Explorer. Click OK to start the exploration. 3.

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

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

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

.

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

only one more X is placed in this column. we will use a reversal amount of 3. In this example. Now the price may begin to fall. This means the price must move 3 boxes before a single O can be drawn. in the example with an X in box 55.25. the price must fall to 52 or less to trigger a reversal. If this trend continues till the price reaches $55. an X can not be placed in the 53 box. 16 • What is Point and Figure? .75. When this occurs. Since the price did move a full $1 from 52 to 53. an O is drawn in boxes 54. the column will have 6 X’s in it. One more aspect when counting downward: a value of $52. 53. This X represents a move to 52. and 52.If the price then moves to 52.50 is read as being in box 53. Therefore.

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

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

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

the prices continued to climb higher. When they reached the level at which they stalled the last time. In practice. 20 • Point and Figure Patterns .Looking at the chart. but stops are especially important when trading with this pattern. They fell back and then started to climb again. Securities forming this pattern should not be ignored. The implication is that prices should continue moving upward. 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.

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

Like the standard double top. unlike double tops. This pattern incorporates rising lows with higher highs. the prices moved upward until they encountered resistance. Rising again. In addition. support was found at a higher level than was previously established. this pattern has some additional confirmation built in. the implication is that prices should continue rising. Bearish Signal The bearish signal is a special form of the double bottom pattern. they climbed past the resistance previously encountered. 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. However. stops are important. When they fell. the second column of O’s must fall below the first. Like double bottoms. 22 • Point and Figure Patterns . the prices fell to some level and established support. As they rebounded.Looking at a bar chart. As with all trades.

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

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

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

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

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

.

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

.

which set the default values for the box size. { setting data to 0 uses the High Low range } box:=1.5. 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. if you wanted to change the box size from 1 to 0. threshold:=2. the other Point and Figure formulas will not work until it is restored. the data array to use. If you do. and the trendline threshold. you could do so. you will see the following text: data:=0. you should edit this indicator. reversal:=3.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. For example. The formula would then look like this: How to Use the Point and Figure Tools • 31 . If this indicator is deleted or renamed. This indicator contains several short lines of text. Do not delete or rename this indicator. It is referenced by all other Point and Figure formulas. reversal amount.

{ setting data to 0 uses the High Low range } box:=0. it can be restored by manually re-typing it: 1. the indicator editor will close. The value on the data line is the price data using in calculating the Point and Figure formulas. 5.5.data:=0. In the formula window. Please note that the semicolon at the end of the line was not changed. 32 • How to Use the Point and Figure Tools . with no extra spaces before or after the name 4. If this is different. reversal:=3. Capitalization does not matter here. If this indicator is deleted or otherwise lost. do not add this indicator to a chart as it will not plot anything. 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. This semicolon is required by the MetaStock formula language and cannot be removed. the formulas will not match the MetaStock chart Finally. 3. Just make sure the punctuation is exact. 2. The other indicators and their uses are described below. threshold:=2. If everything is entered correctly. Click OK. type in the five lines of code listed above. This should be set to the same setting selected in the Point and Figure properties window. or the formula will no longer work correctly.

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

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

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

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

After the trendline is plotted in the chart and looks correct on the Point and Figure chart. 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. 8. In the first three boxes. It may take some practice to correctly anchor the starting point. the trendline will be plotted in your chart. usually 1 box above or below those listed in the Data Window. looking something like the chart below.7. Clicking OK. 9.

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

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

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

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

.

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

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

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

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

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

Sign up to vote on this title
UsefulNot useful