I can honestly attribute the use of point and figure charts as one of the turning points in my trading career.
Earlier on as I studied the works of The indicator is calculated by taking the total number of issues However, what I aim to do in this article is to not just give you the mechanics for how to perform a count, but to show you my exact settings for determining a profit target. I will also provide real-life examples so you can see things in action. I am a firm believer that the market will do whatever it wants to. So, it begs the question, why would I get in the business of attempting to predict or guesstimate where the market is headed?
The simple answer to this question is that I seek to understand how far a stock can run for the basis of calculating my risk versus reward for every trade I take on. This provides me the means to see before I enter a trade whether the stock fits the criteria of my risk profile. I have personally seen this lack of flexibility ruin otherwise would be great traders. I will not be covering horizontal counts in this article because over time I have found this method unreliable. Reason being when you have a significant consolidation range, determining which level and how many boxes to count can be challenging.
While there are methods out there for properly determining which row to count, for me these methods lend themselves to too much subjectivity. Simple as pie right? I am being facetious, but on some level it really is just that simple.
You find the low or high of a major swing. You would be right in this statement, so let me take it a step further and give you my exact configuration.
The reason I like percentages, is because it takes into account the price movement at each box levels versus key price levels where the increments increase. For the most part numbers 1 through 3 should be pretty common; however, number 4 is where I separate myself from the pack.
The key inputs of using a scaling method of percentages and the timeframe of 30 minutes will provide you a level of clarity on the market similar to the first time you put on a pair of glasses assuming you own a pair. From there, RMTI went flat for a period of time working through its consolidation phase. I use to worry about why things happened and needed to know every single detail. I have reached a maturity level now where frankly I no longer care. Once the price is able to leave these consolidation formations, the box count provides the resulting target for the move.
HWAY took me for a bit of a ride. Looking back I was hungry for action while I was on vacation and I had no business placing the trade as the market was in full holiday mode. Please see the count in the below chart:. I knew this for a couple of reasons:. Welcome to the Tradingsim Candlesticks category where we have a number of detailed articles covering the Eastern methodology of candlestick trading. Once you have read through our library of articles, please visit Tradingsim.
Welcome to the Tradingsim Chart Patterns Category. We have a number of articles that detail various chart patterns and how to profit on these repetitive setups. Once you have ready to apply what you have learned, please visit Tradingsim. There is no credit card required to gain access to our free trial period. The indicators category provides a wealth of information regarding technical indicators and how these should be properly used to trade the markets.
Free Trial Log In. Point and Figure 2 lessons. Next Lesson in this Course: How to Calculate Point and Figure Price Targets when Swing Trading I can honestly attribute the use of point and figure charts as one of the turning points in my trading career. How to buy a Stock at Support. How to Sell a Stock at Resistance. See How Tradingsim Works. Candlesticks Welcome to the Tradingsim Candlesticks category where we have a number of detailed articles covering the Eastern methodology of candlestick trading.
Indicators The indicators category provides a wealth of information regarding technical indicators and how these should be properly used to trade the markets.More...