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Point-and-Figure Charts – Forex Charts That Show You The Money!
Wouldn’t it be great if you could find a charting system that instead of focusing on minutes, half-hours, hours, days, and weeks, actually followed and tracked the value itself? Point-and-figure charts are charts that do precisely that: they follow the money.
Point-and-figure charts are charts that follow changes in prices, and not time. Many charts are set up on a time scale, and comparisons are then made between the price as it varies from hour to hour or day to day.
These charts are very different in that any column from a point-and-figure chart can represent any amount of time. There is no set amount of time for each figure. Movements take place only when the minimum determined price moves. If the value doesn’t change, no new markings appear on the chart.
Point-and-figure charts differ in several ways from other types of popular charting, but there are 3 major differences that set point-and-figure charts apart.
1.They have simple, well-defined trading rules
2.They eliminate the clutter of price reversals that are below a minimum box value
3.There is no time factor.
Point-and-figure charting was first credited to Charles Dow, who used them around the turn of the century to make a killing on the stock market. Because the technical aspects of point-and-figure were sound, this strategy was picked up for use in analyzing other markets, as well.
Another major difference between point-and-figure charting and some of its technical counterparts is that it has a relatively strict and simple system of buying and selling, so you don’t need to be a math whiz or rocket scientist to figure out when to do what. A "box" is a measurement of a price movement.
If you see a box of X’s, the overall value went up. A box of O’s means the overall value went down. When a box of X’s has an X one higher than the last box’s, it’s time to buy. When a box of O’s goes one below the last column of O’s, then it’s time to sell. There are variations, but that is the base system.
What’s sometimes bizarre about business is when everyone gets caught up in a new system or trend and they’re so intent on adding to it and perfecting it that an old system that works stops getting used. Where’s the common sense in that?
If you’re trading, you want to be able to keep track of the money. If there’s a charting system that let’s you follow the money, and make a profit, who gives a darn if it’s trendy or not? Going back to common sense, point-and-figure charting is the one method that shows you the money, because it’s the charting system that only moves with the money.
Author: Jason Fielder
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From Jason Fielder: Founder, ForexImpact.com
Article Source: http://EzineArticles.com/?expert=Jason_Fielder
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