Point and Figure Stock Charts Explained Simply. // Point and figure chart tutorial, point and figure chart basics, trading point and figure chart strategy, point and figure chart introduction, point and figure charts 101, point and figure chart video, point and figure charts technical analysis david moadel
David Modell today I'm going to give you
a quick and basic introduction to point
and figure charts some people might look
at them and think they're complicated
but I'm going to break it down for you
and make it really simple and this is
just an introduction it's not everything
all right so it looks like tic-tac-toe
right well X means that the price went
up Oh means that the price went down
alright so X means up and all means down
and this by the way this is for Apple
stock this chart and these charts all
come from stockcharts.com all right so X
means the price went up Oh means the
price went down and time has nothing to
do with it by the way nothing on this
chart right now tells you how long it
took for Apple to go up that's the exes
or how long it took to go down the O's
it just says that it went down and then
down and then down then down the down
and then up and up and up and up and
then down and then up and then down
alright so if you don't mind the fact
that time is not
really represented all that well on your
chart if you're maybe if you're a long
term or medium term investor then this
might be very useful for you so you can
eliminate that factor or at least focus
more on price movements or price action
as opposed to how long it took all right
if you're a maybe a day trader and time
is more of a factor for you then this
may not be your first choice although it
could be depending on your preferences
so X means it went up all means it went
down now how much did it go up or down
well it depends on the price if you'll
notice over here the increments are one
dollar it's one dollar increments below
100 when Apple was below a hundred
dollars and if you'll notice above 100
the increments increase to two dollars
so it jumps up one dollar per box these
are all boxes so each box represents a
dollar
and then it's dollar in one dollar
increments here and then above 100 each
box represents a two dollar movement in
price rather than one dollar okay and
I'll break it down more specifically
here's a chart again from
stockcharts.com and as you can see when
the price is between twenty dollars then
each box represents one dollar of price
movement when it's between a hundred
dollars and two hundred dollars each box
represents two dollars and so the scale
changes or the increments change so it
depends on the the price of the stock at
that time that that determines the
increments meaning how big the boxes are
or how much how much they represent
alright so let's go back to the chart
here so when Apple was under hundred
dollars each movement represented one
dollar and so look at these X's here it
was ninety dollars a share and then I
move it up to 91 then 92 93 94 all the
way up to ninety nine dollars alright
and of course it at any given moment it
was it was not exactly ninety seven
dollars or 98 or 99 all the time you
know it was 97 and change 98 and change
but these it just kind of keeps it
simple for you it rounds it all right so
to speak it just kind of rounds it to
the you know whenever it reaches a
certain price you just you put an X in
the box that's all it is when it reached
97 you put a box you put an X in the
ninety-seven bucks when I reach 98 you
put an X in that box when it reached 99
you put an X in that box or i should say
stockcharts.com did it for you okay
so that's the standard setting it
depends on the the price how much each
box represents now on the standard
settings when the price turns around and
goes three boxes in the opposite
direction then you move over and make a
new column going in the opposite
direction okay so down here each box
represents one dollar so X means
remember X means it was going up and I'm
looking at the scale and I know that
that means it's going up one dollar one
dollar one dollar all the way up to
let's say in this one in this column it
went up to ninety nine dollars maybe a
little bit more maybe nine ninety nine
dollars and change but not up to a
hundred because there's no air there's
no X here in the hundred box I know it's
a hundred bucks and there's no X here
and I know that it turned around and
went three boxes in the other direction
okay because there's no X here the X is
stopped so on the standard settings
which you can change by the way but on
the standard settings as soon as it
turns around and goes in the opposite
direction at least three boxes then you
change the letter from X to 0 or from 0
to X
and now you have a new column to the
right and you go in the opposite
direction so I know that it went in the
opposite direction here and now we
change it two O's and look at that it
notice that the collet the columns are
all at least three X's or OS because it
takes at least three boxes in the other
direction to make a new column in a new
letter all right so it went from 99
three boxes 123 in the other direction
they still drew the O's for the you know
for these boxes because it didn't just
jump three boxes okay it turned around
and it traveled three boxes all right it
still had to go through 98 and 97 to get
to 96 all right so went from 99 turned
around and went to 96 which is at least
three boxes in the other direction but
they still had to plot the the all the
O's on the way to 96 you know it's they
still plotted 98 97 and 96 all right
notice there's no oh here so I know that
it it turned around and went back in the
other direction back up again at least
three boxes
so it turned around and went from 96 to
99 but they're not going to neglect to
fill in the fact that it went through 97
and 98 on the way to 99 and it actually
went more than three boxes but it has to
go at least three boxes in the other
direction to make a new column in a you
know a new letter all right so it went
from 96 or perhaps 96 and change turned
around went to 97 98 99 and then went a
little further into the hundred box and
I know there's no X here above that and
so it turned around and went this way at
least three boxes and then it turned
around and went this way at least three
boxes then turn around went this way and
up and notice that above 100 now each
box represents two dollars per box two
dollars of price movement and so it went
to a hundred went to 102 104 106 108 I
see it didn't go to 110 so it must have
turned around and went at least three
boxes and there it is it went exactly
three boxes down to 102 but you know of
course they still have to plot the fact
that it went through 10 6 and 10 for to
get down to 102 and then turn around and
went up and down and up and again time
is not a factor here it doesn't say how
long it took to go down to 102 dollars a
share and then up to 1 16 or 116 and
change or whatever it was I say 116 and
change because it probably didn't go
exactly to 116 and turn around it might
have gone to 117 or 117 and two fifty
cents or 117 and 99 cents whatever but
it didn't reach 118 I know that because
there's no box here and it turned around
and went this way and then all the way
up here and it tells you the current
price okay
so this tells me since the current price
is here it went up and it went down
turned around and went down a couple of
boxes but not three boxes yet I know
that because if it went it turned it
went here and then went down two boxes
it must not have gone down three boxes
because then it would it would be a new
column with o's here alright so
hopefully that that's a lot to take in
at once but hopefully that makes sense
to you alright so you may have to
probably want to study this more now
just to give a sense of the passage of
time what you can do at least on
stockcharts.com you can make sure that
hide months is unchecked and then update
it and at least it will tell you some
idea of the passage of each month it's
not going to tell you every single day
that passed but if one is january two is
februari three is march april may june
july eight is august nine is September
they didn't want to write ten so they
wrote a B and C for october november and
october november and c is december all
right so b is let's see november see is
december and one is january to his
februari and so on just to give you an
idea of the passage of time here of the
months going by and this is 2015 2016
2017 so clearly this is a long-term
investors chart this is probably not as
useful
minute to minute basis for day traders
all right and using this chart again
helps eliminate the concept of time to a
certain extent so you can just focus on
the price action and if you can see
trend lines very very easily that's a
huge advantage of this method and
they'll even draw it for you here on
this website and you can see some trend
lines and trend lines are their
subjective to a certain extent okay but
they'll draw some ideas for trend lines
for you and you can make support and
resistance lines for example you can see
it bounced off of here this horizontal
line four times one two three four so
you might call that a resistance line
you might call this a support line since
it bounced off of here several times you
get the idea it's it's very easy to make
to draw trend lines support lines
resistance lines that kind of thing all
right so this is a very basic
introduction I suggest that you learn
more about it on your own if you'd like
some help learning about these things or
learning about stocks options finance
investing and trading in general you can
email me at any time my email address is
David Modell @ gmail.com thank you so
much for watching and listening if you
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lot and I'll see you again soon
you
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