Point & Figure Charts... Effective or worthless?
Hey guys, I recently finished reading Thomas A. Dorsey's book on Point & Figure Charting. Having never been exposed to technical analysis I found his simple approach very interesting and he sold his ideas very well. Now, I am looking for a second opinion. Have any of you utilized this strategy for trading and has it worked for you, or is it simply not effective?
Thanks.
technicals have a role in trend following, etc, but shouldn't be used without some sort of fundamental market view. for instance, trading on momentum isn't the same when you're range bound in flat markets.
I actually know Tom Dorsey extremely well. I don't know how effective the technique he uses is relative to any other but I do know that there are some legit firms/managers that use his technique and bring him in to teach courses on his methods.
Point and Figure Charting (Originally Posted: 11/05/2012)
Hey Guys,
I am wondering if any of you find Point and Figure charting useful or have ever tried using it? It seems like no one uses Point and Figure anymore and this is actually the first post on WSO I believe. I have just started learning about it and it seems tedious but useful. Everyone that traded back in the 1910s, 20s, and 30s used Point and Figure.
There's no empirical justification to subscribe to it over any other charting technique. And there's no empirical justification for any charting techniques. That is unless you truly believe in the "art," which is arguably post-hoc hocus pocus.
What sort of trading are you looking to do?
Anyone understand Point and Figure P&F Charts (Originally Posted: 10/18/2012)
Hey everyone, I am taking a course on technical analysis and have come across an area of confusion. I am having a very hard time grabbing the concept of the P&F (Point and Figure) charting.
Please if you understand these charts and how they are constructed please PM me.
http://1.bp.blogspot.com/-K6AdoBAu0qk/TdZ-_eGPFdI/AAAAAAAAAbE/CzvR7Gj2m…
This is a 1X3 chart , also known as a 3 box reversal chart (This is my understanding).
**My problem is, to "start" a new column (shift from X-O or vice versa) you need a 3 dollar change (this is my assumption). If I am correct how and why then on the graph looking at column 1 and 2 only. The price of column 1 is 49 WHY is there an O placed in column 2 at 48. Should it not be placed at 46?
Again please pm me and we can discuss this further. I am sure I am just missing something basic. Feel free to post below, but PM's would be much more appreciated. Thanks!!
*****EDIT****** I finally have found that "YES" it needs to move 3 dollars before the plot on the new column can be made "HOWEVER" you are to "fill in" all price movements, thus not being left with a gap. Really wish this was explained in my textbook, cause man did I ever spend awhile trying to understand this given what was known! All and all I have got it now!
I put some time into the Dorsey Wright shit when I was in PWM a couple summers ago. I didn't understand the value of it. Good news though: never saw or heard of a single person in trading using it. Don't waste your time with it unless you have to
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