Thursday, November 1, 2007

Point and Figure Charts- Part One

You may have seen something on some stock sites that looks like what a football coach would have on his chalkboard; a mix of X's and O's. Maybe it's hugs and kisses for Valentine's Day. Or, perhaps, it's a new form of multi-level tic-tac-toe. The correct answer is "none of the above". It's a form of tracking stocks called a Point and Figure Chart.

Point & Figure (P and F) charts are made up of columns of X's and O's that display filtered price movements over time. Some of the benefits of using P&F charts instead of the more traditional bar or candlestick charts are:

Getting rid of the tiny, insignificant price variations that often make bar charts appear 'cluttered'

Removing the tricky distortions of time from the analysis process, to give a clearer picture of what's really going on with the stock

Make locating support/resistance levels much easier,and make trend line recognition a 'cake-walk'

Enable the user to concentrate on the important long-term price developments

The Point & Figure method of chart analysis has been utilized for many years. Before the wide-spread, almost universal use of computers, P & F charts were invaluable to stock trackers. In just a few minutes, using only graph paper, a pen or pencil, and the stock quotes from the newspaper, P&F chartists were able to update and analyze 25, 50, even 100 charts each day! In the late 1980's, computers came into universal use by stock trackers. Using computers made it much easier to create bar charts. As a result, P&F charts began to disappear. Recently, however, P & F charting is undergoing a "Renaissance", and is once again growing in popularity, as investors look for simpler and better ways to select stocks. Even in the world of the stock market, "less is more".

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Dottye is a Realtor, an Internet Marketer, and a published Author of three books, and several short stories and songs. For more information, please visit: