Best Thread learning to read price action with p/f charts

[Dentalfloss]

even easier.it can be downloaded from the web

 

[Dentalfloss]

this chart holds the key to the direction of all markets..the fed is in control
daily data plot

 

[Dentalfloss]

the beauty of p/f charts

 

[Dentalfloss]

 

[Dentalfloss]

ftse100
10 min data plot

 

[kimo'sabby]

this chart holds the key to the direction of all markets..the fed is in control
daily data plot

Hello dentist.

I have absolutely no knowledge of p&f, so if you don't mind i have a few qs.

1) are the 'o's and 'x's automatically plotted for you as time goes on?

2) The market that you have put up in this chart, what is the spread?

If these questions seem stupid in anyway i appologise, but i am genuinely intruiged by these charts, some obvious patterns seem to jump straight out.


Thanks,

Kim.

 

[kimo'sabby]

Right, re-read the chart. 09 10, refers to the year, yes? so if i bought on the first 'x' and exited or reversed on the first 'o'....is this feasible?

Again, sorry if i'm missing something or maybe alot, but i've never looked at these ever before.

 

[EmotionIsTheBigEvel]

Nice to see that there is a PnF thread on T2W also! On the Internet you see rarely a PnF discussion. The question remains why? Isn't it useful or is it so strange for people to look at '0' and 'x' charts because they have never seen it before and are anxious to use it, may be it seems that it has some magic around it? Or isn't it possible to make a living out of PnF charts?

I've used PnF charts for some years now, but not in the way as described by jeremy duplessis. After I have read his book last year I decided to put some effort in it to go and trade his method. From a hindsight it seems very easy, especially because of the rules are so clear. But I find it very difficult to use it with day trading!

So I was wondering if there are other people using the PnF charts to day trade? Is it possible to make a living using day trading PnF techniques?

On the longer timeframes it is a very handy tool to help you trading, but for day trading there are some pitfalls. 45% lines are most of the times unusable, you have to use less stall lines. Trend lines are rarely broken by a nice pattern, what makes it difficult to tell if the brake is a good one or a false one... Other question is, where to leave the market, do you wait for a break of the trend line that you can't trust because it isn't a 45% line. But you don't want to give too much profits back to the market, but you have to give the market enough breath to bread...

As you can see in this picture:

with some hindsight you can easily point your entry points. It looks very easy, but when you look at the second trade entry (blue arrow) you wonder where to exit? Is that at the triple bottom break or do you wait till the trend line you don't trust is broken? Then look at the last trend line drawn, you see a long position which is entered on a 5 top break (which is a very dangers pattern, it mostly points at weakness). See that the break is very far from the trend line! And then look and see that this position had the same profit 18 bars ago as it has at the current time, so you gave away a lot of profit and with it a lot of risk, because when it tests the trend line (which you probably would have drawn after te test of it) it could go far down. As I said before, the 5 top break points at weakness in the market...

I hope that there are other people who try and make some money with day trading using PnF charts who would like to discuss the above points made. And help each other to address the PnF topic, while there aren't so many people around the Internet who do. And maybe later on join together in a chat room to do some real life trading setup discus sings together? But let’s start at discussing some strategies.

I hope there is some interest in this topic!

 

[EmotionIsTheBigEvel]

Right, re-read the chart. 09 10, refers to the year, yes? so if i bought on the first 'x' and exited or reversed on the first 'o'....is this feasible?

Again, sorry if i'm missing something or maybe alot, but i've never looked at these ever before.

Hi Kimo,

It is possible what you see, but it is not what you want. PnF charts are merely about patterns and trends.

And as response on your previous question 1, no 'x' and '0' are only drawn when new prices occur, not when time moves on! PnF charts are charts without time!!! But they are still 2 dimensional ;-)
And to answer your question 2, go over to elitetrader and find the thread "Learning to read Price Action with P&F Charting" by holygrail, it gives you a nice introduction into the PnF charts. But to really understand it I would like to recommend you the book from Jeremy du Plessis as Dentist points out too.

 

[EmotionIsTheBigEvel]

In my previous chart you saw that it ended being in an uptrend. Now some time later I made another screenshot of the same chart, no trend lines have been changed, only added.

What do we see on this new chart:
At the green arrow we see a triple top sell signal at exactly the point of the drawn trend line. If we say that the line is drawn at the right place then this means a change in trend, putting it into a down trend from now on. And this is a very important happening by the book in the PnF world! Except that the trend line isn't in an angle of 45%. Because of this happening we draw a falling trend line from the last top. We are SHORT now.

What we see then is a retracement after 2 more up columns that shows a triple top buy signal. Also at the place where we have drawn a trend line. So we go LONG now. And we draw a trend line from the last bottom...
Or we say that the last blue increasing trend line was not drawn at the right place???
So what shall it be...?
I say it wasn't drawn at the right place, so I draw the orange trend line. If this is the case then the last two positions shouldn't been taken! We should be long since the blue arrow pointed at the 5 top breakout!

Then at the black arrow we see another possible sell signal...
At first we see that there is some resistance around the orange line, but finally it got broken, checked again and then it seems to go down. So we can draw a falling trend line above the last top. Question will be how steep shoot it be?

And the biggest question is, where should we have closed the uptrend? And when should we take another short position?

I hope I started a nice discussion, and I am very curious what you guys would have done in these cases? What trends would you have taken? Where would your stops be? And why would you have done it?

Cheers,
Emotion

 

[timsk]

Hi Kimo,

It is possible what you see, but it is not what you want. PnF charts are merely about patterns and trends.

And as response on your previous question 1, no 'x' and '0' are only drawn when new prices occur, not when time moves on! PnF charts are charts without time!!! But they are still 2 dimensional ;-)
And to answer your question 2, go over to elitetrader and find the thread "Learning to read Price Action with P&F Charting" by holygrail, it gives you a nice introduction into the PnF charts. But to really understand it I would like to recommend you the book from Jeremy du Plessis as Dentist points out too.

Good advice Emo' with one notable exception - there's no need to send peeps over to ET for a solid intro to P&F - we have it all here!

Point and Figure Charting: Part 1 - The Basics
Point and Figure Charting: Part 2 - The Bits That Aren't As Basic
. . . and if the first two articles get your juices flowing, you can go on to this:
Point & Figure Gone High Tech
Enjoy!
Tim.

 

[Dentalfloss]

emotion..i dont think that ninja trader is right for p/f day trading.first of all,the "x" and the "o" must be properly formed and not squat or elongated.so that means you can draw the 45 degree trendlines to show the trend properly.i know from other ninja users,that they are going to rejig the p/f at some point.keep to 45 degree trendlines.you get a better feel
the other thing is that they must be calculated properly.so that you can look at close and hilo plot.so therefore,you can look at all aspects.althought,in day trading,a good starting point is 1 min close plot.make sure the columns are not too long
the solution is....dont use ninja for the final decision,especially with the tick plot
if you have iq feed,there is a simple solution.buy bullseye/cost $149.then add "qcollector" which is $99.you can then programme in qcollector to get any data you want,ie tick,1minute etc.it is slightly limited.but carl,the owner of bullseye is soon to come out with a real time version
even better.use updata at $75 a month.it will take iq feed

 

[Dentalfloss]

fom duplessis

 

[Dentalfloss]

and this also

 

[Dentalfloss]

so this is the result
nasdaq 100
10 min data plot
from last week
see how easy it is to read

 

[Dentalfloss]

eurusd
last week
10 min data plot.see how easier it is to read

 

[Dentalfloss]

eurusd.chart
if you look at the chart i posted.i had broken it down to bullish and bearish sections.the green trendline was the divider.this was a minor trend.but the lookback period must be enough to get the WHOLE trend.then you can break it down into bullish and bearish section.once price had penetrated the green line/downwards,that to me was fully bearish.this happened on tuesday at about 3pm.it turned out the greek crisis emerged again the following day.
the rule is...long above the bullish support line.short below the bearish resistance line
my own style is not to trade the p/f signals exactly,but to trade the reaction points.ie p/b,then confirm with a p/f signal on a lower box size and possibly a lower time plot.if going long.must have rising lows.vice versa shorts

 

[Dentalfloss]

the 45 degree trendlines will help you accept or reject the p/f signals.therefore,if the "x" and "o" are not properly formed,these do not give the right aspect ratio to the chart.even if you draw 45 degree trendlines,you are still not getting the right picture.ie it is skewed.there is one method around this,that is to elongate the chart by height and width to get the x and o shapes right.and then add 45 degree trendlines
it- finace charts can be fixed this way.but uneless they are calculated properly,then the true picture is not seen.these chart are not recommended by me
stockcharts do intraday p/f for $15 a month.they are pretty good.20 min delayed

 

[Dentalfloss]

a chart from the duplessis presentation
you can see how he has broken it down into bullish and bearish sections.you can also see that the chart has enough lookback period to show the full uptrend,the full downtrend and the new uptrend

when you see a break of an important trendline.make a quick note of the date it broke.then if you are looking ata lower box size/time plot ,then make sure this point is on

 

[Dentalfloss]

forgot to mention.once the chart is broken down into sections,put on the vertical counts,use duplessis rules.that really gives you a feel of what is happening.
then wait for p/b.wait for vertical count to form.once breakout happens,you most often get a p/b
assess that p/b
1.did it mke the chart reverse.or was it a major p/b on that time plot.,did it take out an s/r.if not,then enter at that level or near.just my 2 cents worth