Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Point and Figure Charting -- Ignore unavailable to you. Want to Upgrade?

To: Craig Monroe who wrote (242)	2/1/1998 10:26:00 AM
From: Ben Antanaitis	Respond to of 34811

Craig, One other thing about MetaStock and the other 'universal' charting program.... they include lots of TA technical indicators in their tool kits, P&F is only one small piece of their pie. It is a lot easier to program a P&F-like function if you throw away the 'traditional' scaling, which was a way to try to accommodate the fact that a three box reversal was vastly different percentage price swing at $5, $20, $100, etc when you had a single fixed box value. Also, the original charts were done by hand, on the fly, and anything that required calculation would have been very, very difficult, if not impossible. The 'approximate sliding percentage scaling' of the 'traditional' technique is one of the major reasons I like to use a logarithmic scaling that modern desktop computers, and laptops, make completely practical and easy to do. The P&F patterns and analysis technique are almost totally unchanged when using log scaling. Only the target price projections get 'modified'. By the way, logarithmic scaling is simply having each box be a fixed 'percentage' value different from the box above and below ie with logarithmic scaling you can say "I want each box value have a +2% price difference from the box below it and +2% price difference from the box below it". I use a 2% scaled chart because it is the closest match to the Cohen, Burke, Carroll, Dorsey 'traditional' chart scaling eg a three box reversal at $100 is 6%. IF you can say that the supply and demand of a stock is based on percent price changes (the stock has moved 5% or 10%) rather than price changes (the stock price changed $.75 or $13.50 or $186 or $675) THEN logarithmic scaling gives you the 'pure' picture of the movement, without having to figure out what percentage a given dollar change equates to. I also feel that the conversion of ALL the world markets to a decimal basis will make all the systems based on fractional prices lose a little in the translation. Additionally, percentage change is applicable to markets and issues that are not denominated in terms of $US and it's inherent range of scale. Ben A.