Point and Figure (P&F) Chart

The Point and Figure (P&F) chart was developed in the late 19th century and refined by Charles Dow, the founder of Dow Theory. Unlike time-based charts, P&F charts focus only on price movements, using X’s to indicate price increases and O’s to indicate price declines. A new column is formed only after a significant price change, filtering out minor fluctuations and false signals.

Importance

• Eliminates market noise by filtering out minor price fluctuations.
• Helps traders identify strong trends and support/resistance levels.
• Useful for breakout and long-term trading strategies.

Limitations

• Not ideal for short-term trading due to the focus on larger price moves.
• Does not display exact price levels at specific times.