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

To: Iceberg who wrote (18190)	4/15/1999 11:20:00 PM
From: Augustus Gloop	Respond to of 34816

I think the book points out that P&F is not a perfect science. My question would be; what is? I am working hard to learn P&F because I think its value is in timing. Fundamentals tell us what to buy and the charts help us determine when. You will never buy at the bottom or sell at the top but charting the P&F way helps.

To: Iceberg who wrote (18190)	4/16/1999 8:32:00 AM
From: Don Pueblo	Read Replies (1) \| Respond to of 34816

Ice, [I feel like Tom Cruise! Cool!] Ice, I appreciate your response. Let me say this: It is my belief that Point and Figure Charting is not more widely used for the very reasons you mention. 20 years ago, I saw a P&F chart and did not understand it. It looked, to quote Marty Feldman in Young Frankenstein, "Abby Normal". In my experience, it is impossible to make use of a tool that I cannot understand. At the time I was first exposed to P&F, I had the "normal" bar chart for the same thing handy, (it happened to be Corn Futures as I recall) and there was no contest as to what was easier to understand. That was mainly because I already had a rudimentary grasp of bar charts. Then, I was told (by someone who did not understand P&F) that P&F "ignores time". That was all it took for me; a bunch of Xs and Os that looked goofy and the "reason" for it, which sounded even goofier. So I forgot about P&F for 20 years. I studied everything else, and at present I am a professional day trader. I know Technical Analysis pretty well. I can make pretty good calls with "traditional TA". So, I feel qualified to speak, and I hope you feel you can trust me to some degree on this. It's as if I were trying to understand Welles Wilder's Relative Strength model, and before I started studying it, somebody said, "It's a lagging indicator, stochastic is more accurate, forget RSI". What is the source of this information? Does this guy understand RSI? It makes a big difference where TA is concerned, believe me. I know RSI, and I know stochastic, and I would never say "forget RSI". Recently, something very interesting occurred. A friend of mine, who is not involved in the stock market for 10 hours a day like I am, made a very, very accurate call. Then another one, then another one, then another one. These calls were quite close to calls that I would have made with my own brand of TA, with two differences: they were on stocks that I never looked at, and they had superb risk/reward ratios. Instead of trying to explain it to me, my friend suggested I read Tom Dorsey's book. So, I did. I'm not going to sit here and try to explain Point and Figure charting. What I will do is ask you to check with a few people that actually understand Point and Figure Charting. I used to tell my ex-wife that the technique is only as good as the person that is applying it. (And, by the way, if you look at a "daily" P&F chart, you will see, in some of the boxes, numbers like "4" or "7". That's April and July. But don't expect 30 Xs and Os in April, and don't try and "figure it out" without reading the book. You'll just get confused.) I'm a true newbie at P&F. But I'll tell you something. If you buy that book that Dorsey wrote, and don't find something that you think will really help you make better calls, then you didn't read the book. If you actually read it, you will see some things that will be worth the price of the book. That's a good hint, my friend, and that's the truth. wavcentral.com

To: Iceberg who wrote (18190)	4/16/1999 5:05:00 PM
From: Don Pueblo	Read Replies (2) \| Respond to of 34816

The time factor is there. Let's look at exactly what time is. As I see it, it is a measuring device. To relate it to P&F: I put an "X" on a P&F chart, then at some later point in time, (whenever) I put another "X". Time has passed; empirically we have evidence on the P&F chart that time has passed. Two "Xs" means time has passed. That's all there is to it. P&F says that it makes no difference whether or not it was one day or one year between the "Xs". That's what I would call "discounting" time. Further, what is a triple top? A double top with more time? Same with a Spread Triple Top. A Catapult makes use of the time factor in order to give a signal. It's discounted, but it's there, empirically. One pattern forms after the first one. Up until I started studying P&F, I gave tremendous credence to the time factor in a chart. I'm talking about a bar chart. I still do. I have not abandoned everything I have ever learned. In my opinion, your assertion that P&F cannot be fully based in reality because there 'is no time demonstrated' cannot possibly be accurate, for two reasons; first, there is time on a P&F chart, as I have explained, and secondly, I am not fully convinced that time is a requisite for reality.