Charting and Studies User Guide - CQG.com

Page 78
Point and Figure (PF)
Unlike other charts, point and figure charts have no time axis. Instead of plotting price over
time, these charts plot the changes of direction in price on a graph-like grid. The grid shows a
column of Xs as the price rises followed by a column of Os as the price falls.
Reversals are constructed according to The Definitive Guide to Point and Figure by Jeremy du
Plessis. For instance, notice in the image that columns can contain both X and O. Plessis allows
1-box reversals, helping to make analytics more useful and accurate as well as saving real
estate.
Boxes on the grid are exactly 1x1. When you scale the chart, the boxes remain square.
Point and figure charts can help you avoid the noise of minor market movements, as only
significant price changes are plotted on the chart.
They also facilitate a quick, visual assessment of the overall trend of the market.
Plotting of price data is dependent on the Box Size parameter and the Reversal parameter.
Box Size establishes a price (or tick) unit by which the system calculates Xs and Os. You
decide how many price units make up a box. The price must move this many units in the
opposite direction to begin a new column. An X is plotted when prices rise by this size, and an
O is plotted when prices fall by this size.
This process of plotting Xs or Os continues until the Reversal is reached. When prices reverse,
they must reverse by this amount multiplied by the box size before a new column is plotted. A
new column, therefore, signals a change in the price trend.
Chart Types