Point and Figure for Forex?

[Pip Rippy]

Does anynody use point and figure charts in forex market? I use VTTrader(CMS) and they are in the demo. I have been visual backtesting the charts and they seem to filter out alot of noise and produce some very good trends.
What got me started looking into this is that a new article by the age old Cornelius Luca is located at traders.com. I see people mentioning P&F but I cant get any reall feedback.
What P&F timeframes are good for intraday trading?
I trade with 15min-30min-60min charts and based on the nature of PF charts I wonder what would correspond?
If you look at the timeframes on 5min-10min-30-min-60min, they are all somewhat similar. Based on the fact that they do nothing if the market is quit or if it does not move more than the "Box amount", they display a small amount of data. I am thinking that 1min or 5min would be more precise than 30min or 60min. Luca mentions the fact that forex is 24hr that P&F is ideal for forex. I also wonder what the buy and sell signals look like, and what the setups are etc.. I searched the forum and could not find any good threads. Please help a fellow trader.
. Thanks Pip Rippy

[Triffick]

Hi pip rippy

P&F can be used well in forex and can evenbe extended to use on indicators such as RSI etc.
Like time series charts you do have to gather a feel for them but they come with unambiguous buy/sell signals, stops and very clear reversals. the point to remember is that they function in a very different way because the time element in removed. The chice of box size and reversal depends mainly on your capital(max drawdown tolerence) and your trading timeframe. intraday weekly monthly etc. so you have to make the same choices and selections you did when you first started trading. I suggest you experiment with a book on your knee I recommend 'the definitive guide to point and figure' by Jeremy du plessis isbn 1-897-59763-0 It is not the cheapest but he covers all the bases in detail. he does not describe forex in detail but you will know so much about P&F it will be a short step for you. like most things P&F is quick to learn but to use well takes a little effort. But it does some amazing things.
Good trading - trif

[Triffick]

Pip

A thought struck me.
Try eurodollar at a 25 pip box with a three box reversal that will filter out anyhtng less that a 75 pip reversal and will not move the box unless there has been a 25 pip move over the previous box then try a 25x2 and 25x1 then do the same at 50 pips and again at 10 then you should see a lot of difference in patterns.
you will then be able to compare what you see with what you do now - you may be a monthly 400 pip move trader or a 25 pip scalper. I dont know but you will see what happens. The bigger the box and reversal the less columns you get but the bigger the potential drawdown before a reversal is signalled. Do a bit of search engine trawling and you should pick up enough to get off the ground but dont trade till you understand the signals and price prediction with confidence. Cheers trif.

[Pip Rippy]

Triffick,

Thank you for the response. I did not realize how barron the forex market is regarding point and figure. I got more responses when I was looking into Chaos Trading by Williams. I do not know if it is a good thing or a bad thing. You would think that something that is used by so few traders would give some good buy/sell signals.
I was looking into that book you mentioned and are glad to hear that it is usefull. The other book you hear about in P&F is by Dorsey Wright, but I think it is geared more towards the equity market and his sector charting. I do not know how much is in his book as far as technical trading with P&F. What other resources are good for P&F.
A main question I have is in what timeframe 10min-30min-60min-4hr is usefull for typical intraday swing trading, not scalping. I found that 10 min generates to many whipsaws and 60min/4hr sometimes does not give you much intraday. I know it is all time permited by actual price movement by I like trades that I do not have to rollover.
The smallest I trade is 15min for Zero-line rejects with CCI via Woodies setups. Mainly I like 30min to 60 min for breakout trades via trendlines, support resistance, moving averages basic technical analysis.
I have grown to use less indicators and try to focus on just price movement. That is what led me to point and figure charting. I like the fact that it shows support and resistance so cleanly. So far I have placed a couple of breakout trades that had easy to define profit targets based on past S/R areas. I am going to have to learn how to identify profitable patterns and various entry setups etc and how to place stops etc.. So any advice on what you have seen that works. My main thought is on what timeframe is ideal to identify good trends early but does not generate that many whipsaws. I guess that is the million dollar question we are all trying to answer !

[Pip Rippy]

I forgot to ask about what setting for box setup. The default with VTTrader is the open setting. You have the option of high, close, low, open. I would guess the close would be correct? I have also been using 3 box reversal.
Also, have you looked into Renko charts? They look somewhat similar.

[Triffick]

Pip Hi,
to answer your question to the best of my ability I suggest you first look at the market you trade in terms of timeframe and pip range guess you have a typical 6 to 10 hour active day look at this in terms of 'how many pips move' cover a swing in that time frame in your zone. it may be that a 5 pip box witha 3 box reversal will do it, but to cover other time frames - which is important in P&F the equivalent would be bigger boxes - greater range roughly corollate to a longer time as you might expect. you should use several charts with different box sizes because confirmations in different boxe sizes/reversals strengthen the balance of probabilities. my inital reaction is to go with eurodollar and try 5x3 covering a trade you did with a clear signal and successful outcome - see if you get a good P&F signal around the same price frame and if it looks like you would have gone with it. up/down the box size and see if you get confirmation again. Also see how close this box fits with your intra day feelings. I must now drop the bomb on you. P&F price predictions do not have a time element associated with them! so it is really hard to eyeball it and time the trade. Actually dont try. P&F is much more - trade on signal and wait the outcome.
Just for fun try 5x3 on the 21st (Tue) there was a drop about 8 am your time - good outside day looks like its ok to me but the closeout would cost you 15 pips at least on a 80 pip (ish) move and getting in at least the same try a 5X2 may get a better result, one thing to remember is the multiple box reversal gives an asymetrical reversal signal - a built in filter so you get a bit of certainty with the reverse. Sorry if I am a bit too conversational with my musing but you do need to play with it to get a feel. Very little experimentation will earn you a lot of interpretation. Cheers trif.
PS.
Updata have fantastic P&F and you can get a free trial with forex if you feel like a test.

[Triffick]

Ho yes close is tradditional. cheers

[arco]

Hi All

Interesting topic, - I sometimes use P&F as confirmation of other systems,
but it can work well on its own.

Here you can see the benefits of P&F used on EOD charting.

Circa 700-800 pips on the first move down.

200 - 600 on the retracement, centre of chart.
(SAR or resistance break)

and circa 500 on the recent downmove.

If it helps, here's a link for a free P&F course.

http://206.155.168.124/cgi-bin/foxweb.exe/fwuniv


GTA - arco