Point & Figure

3-box reversal filters out minor fluctuations, creating cleaner trends. 1-box reversal captures every small move, creating many columns but more noise and false signals. 3-box is the industry standard, offering the best balance between sensitivity and reliability.

Traditional scaling uses price-based rules (e.g., A$1 box for stocks A$20-100). Alternatively, use 1-2% of stock price or ATR(14). Test on historical data - aim for 20-40 columns per year for swing trading. Too many columns = too noisy.

Never. Each column is exclusively X's or O's. This is fundamental to P&F. When price reverses by the reversal amount, you start a NEW column to the right. Columns always alternate between X and O.

P&F ignores time, but you need price data to build it. Daily data is standard, using High/Low method. Some use intraday data for more responsive charts. Weekly data creates smoother, longer-term charts. The choice affects how many columns form.

Horizontal count targets are reached about 70-75% of the time. They're guidelines, not guarantees. Use them for profit planning - take partial profits before target, trail remainder. Strong trends often exceed targets.

From a significant low, draw diagonally up-right: one box right, one box up for each step. From a significant high, draw down-right: one box right, one box down. Lines provide dynamic support/resistance. Breaks signal potential trend changes.

Horizontal count uses pattern width (columns) for calculation - more conservative, higher reliability. Vertical count uses the breakout column height - more aggressive, reaches less often. Most traders prefer horizontal count for initial targets.

Catapult forms in three phases: 1) Initial breakout (Double/Triple Top breaks), 2) Pullback that does NOT make new low (holds above prior O column low), 3) Continuation breakout. The pullback tests and confirms buyer commitment.

Generally no. Signals above the bullish 45° line have ~75% win rate versus ~42% below. Trading with the trend line dramatically improves results. Only consider counter-trend trades on major pattern completions with other confirmation.

Create P&F charts for each sector index or ETF. Overweight sectors with bullish P&F patterns (above 45° line, X columns running). Underweight sectors with bearish patterns. This aligns portfolio with sector momentum.

A Compound Fulcrum is an extended base pattern (15-20+ columns) with multiple tests of support at similar levels. It represents major accumulation. Breakouts from Compound Fulcrums are extremely powerful with ~80% success rate and often exceed count targets.

Calculate: 1) Current X column high vs prior X column high - must be 3+ boxes above. 2) Following O column retracement - must be 50%+ of the pole. If both conditions met, flag as High-Pole Warning for caution on longs.

Pattern width indicates expected duration - wider patterns suggest longer moves. Average column duration × expected columns to target = estimated time. Add 50% buffer for DTE. Catapults (already tested) may move faster, use shorter DTE.

Score by: Pattern (Double 2, Triple 4, Catapult 5, Spread Triple 6) + Width (3-5: 1, 6-8: 2, 9+: 3) + 45° position (above: 1) + RS (bullish: 2). Minimum threshold of 7. Testing shows scores of 9+ have 75%+ win rate.

Track rolling profit factor by pattern type and score category. If Triple Top+ patterns show declining PF despite normal market conditions, edge may be decaying. Compare to simple buy-and-hold - if P&F loses relative advantage, recalibrate box sizes.