Continue reading...Long before we had computers to chart price, traders were making a living and doing it by watching price movement. One of the earliest types of charts was called point and figure charting (P&F). It started from traders who would tick off prices as they watched the trading. Eventually the ticks changed to X’s and O’s to note movement in price and even see trends.
Today, many chartists have switched to candlestick charting to make their decisions to buy or sell. A drawback to this style of charting is that many people are prone to exiting early from profitable trades when they see small pullbacks or corrections. An advantage of point and figure charting is that it allows the trader to see the trend and stay in the trend even through minor corrections. For this advantage, we may sacrifice some profits with a larger stop but with the larger profit potential it may be worth it.
Another interesting feature of point and figure charts is that it does not take time into account when...
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