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Point & Figure Charts
SpecialA time-independent grid-based chart plotting X columns for rising prices and O columns for falling prices. Over 130 years of continuous development.
Origins & History
Point & Figure charting traces its origins to the late 19th century.
Charles Dow (1851-1902), founder of The Wall Street Journal, developed the conceptual foundation for analyzing independent of time.
Dow believed price action contained all necessary information and that time obscured genuine trends.
The invention is attributed to Dow’s Wall Street contemporaries in the 1880s.
They maintained figure charts on graph with dots for rising prices and dashes for falling prices.
These early book method charts were the direct precursors of modern P&F charts.
Traders updated their charts by each evening, building a record of supply and demand.
Charles B. Milliken first described the technique in print in the early 1900s.
Milliken established X for rising prices and O for falling prices.
Victor deVilliers fully codified the in his 1933 book.
He established the X/O notation, codified 3-box reversal, and described counting.
The 1930s and 1940s were P&F’s golden age of manual charting.
Wall Street firms employed dedicated chartists with binders and coloured pencils.
The Charteraft organization, founded in 1948, became the premier P&F charting service.
Charteraft published weekly chart books for thousands of stocks nationwide.
Alexander H. Wheelan published in 1954 introducing catapult and high pole patterns.
He expanded the P&F vocabulary from roughly a dozen patterns to over 25.
Thomas J. Dorsey founded Dorsey, Wright & Associates in 1987.
This was the first fully computerized P&F charting system.
Dorsey’s 1995 book integrated P&F with modern portfolio theory and sector rotation.
By the early 2000s, Dorsey Wright managed over $20 billion using P&F strategies.
Nasdaq acquired the firm in 2015, bringing P&F into the institutional mainstream.
Today, Quatick Charts provides fully automated P&F construction and pattern recognition.
Theory & Core Principles
P&F is built on two fundamental parameters: the box size B and the reversal amount R.
The box size is the price increment represented by each X or O .
The reversal amount is how many boxes price must reverse to start a new column.
These parameters create a grid where X and O alternate directly.
X of rising prices indicate demand dominance.
O of falling prices indicate supply dominance.
The core insight is that can be discretized into increments.
Requiring a full box before a filters sub-increment noise mechanically.
Requiring a multi-box reversal filters minor counter-trend fluctuations.
Every on a P&F chart is a confirmed, significant .
Alternating short with no indicate a congestion zone of equilibrium.
The zone is proportional to the eventual breakout magnitude.
This is the theoretical for the count method.
The 45- is unique to P&F charting.
It represents a 1x1 slope: one box of price per column.
A break of this line by a full column signals a mechanical trend reversal.
In a healthy uptrend, X are progressively taller and O columns shorter.
When O begin to lengthen, supply is reasserting itself.
The principle of alternation says consecutive differ in length.
Column-length dynamics provide context for evaluating .
The Mathematics
The P&F construction algorithm is fully deterministic and mechanical.
Given the same and parameters, it always produces the same chart.
Adding to an X column: High(current) >= High(last X) + B.
Each full B increment adds one X. Fractional increments are discarded.
Adding to an O column: Low(current) <= Low(last O) - B.
Each full B decrement adds one O .
Reversal from X to O: Low(current) <= High(last X) - (R x B).
The new O column starts at least R marks below the prior X high.
Reversal from O to X: High(current) >= Low(last O) + (R x B).
The new X column starts at least R marks above the prior O low.
-based adaptive box size: B = ATR() x multiplier.
The is calculated over the specified lookback period, default 14.
The multiplier range is 0.3 to 5.0 with a default of 1.0.
This automatically adapts the box size to changing market volatility.
-based box size: B = Price x (Percent/100).
This scales proportionally with the price level.
count target: BreakoutLevel + (ZoneWidth x B x R).
ZoneWidth is the number of in the congestion zone.
Preferred for of 6 or more .
count target: BreakoutLevel + (ColumnHeight x B x R).
ColumnHeight is the number of marks in the breakout column.
Preferred for narrow formations of 3 to 5 .
Bearish targets subtract instead of add: BreakdownLevel - (Count x B x R).
Example: Stock at $50, B=$1, R=3. An 8-column zone between $48 and $52.
Breakout above $52 with 6 X’s. : 8 x 1 x 3 = $24 above $52 = $76.
: 6 x 1 x 3 = $18 above $52 = $70. at $70-76.
Column volume is the sum of source bar volumes within each column.
A breakout with volume 1.5x above the 20-column average is institutionally significant.
Anatomy
A P&F chart consists of a grid of boxes organized into strictly alternating of X marks and O marks. Understanding every structural element is essential before attempting pattern recognition.
Construction Pipeline
The P&F construction pipeline processes OHLC sequentially, building the chart column by column with mechanical rules.
- 1Determine Parameters
Select box size B and reversal amount R. B can be , -based, or -based. R is typically 3.
- 2Initialize First Column
first bar to B. Up by B starts X column. Down by B starts O column. If less than B, continue until B-sized move.
- 3Extend Current Column
For each bar, check if column extends. Add marks for each full B increment. Single bar can add multiple marks.
- 4Check Reversal
If no , check if price reversed by R x B or more. For X: Low <= LastX - (RxB). For O: High >= LastO + (RxB).
- 5Execute Reversal
New column one position . Start with R marks minimum plus any marks beyond the reversal threshold.
- 6Process Remaining Bars
Repeat and reversal checks for all bars. No . Chart builds left to .
- 7Detect Patterns
Scan against pattern definitions. Each pattern has mechanical detection rules.
- 8Render Chart
Display grid with configured colours. Overlay trend lines, objectives, and volume.
Visual Configuration
Quatick Charts provides extensive configuration for P&F charts.
Box size and reversal amount are the two most consequential parameters.
Box size modes: (constant), -based (recommended), and -based.
Reversal can be specified in boxes or as a of price.
All other control colours, grid lines, and auxiliary display layers.
Interpretation Guide
P&F has over 30 named patterns organized into simple, complex, and reversal formations.
Master simple formations first: double top, double bottom, bullish signal, and bearish signal.
These account for roughly 80% of actionable signals in trending markets.
The interpretation process is mechanical and has seven steps.
First, determine the dominant trend from the 45- line.
Second, identify congestion and their boundaries.
Third, watch for breakouts from these .
Fourth, classify the breakout pattern using mechanical rules.
Fifth, the using or vertical count.
Sixth, place the according to the pattern standard rule.
Seventh, execute the trade.
This process removes all emotion and subjectivity from the trading .
Stop: One box below the separating O low.
Target: count from O low to breakout, times B times R.
Stop: One box above the separating X high.
Target: count from X high to breakdown, times B times R, projected down.
Stop: One box below the O in the formation.
Target: count across all , times B times R.
Stop: One box below the O low.
Target: count from initial double top to catapult breakout.
Stop: One box above the X high.
Target: count from initial breakdown to catapult, projected down.
Stop: One box below the single intervening O.
Target: Conservative count of the second X column.
Stop: One box above the single intervening X.
Target: count of second O column, projected downward.
Stop: One box beyond the last counter-column extreme.
Target: 50% of the high pole height.
Stop: One box below the spring low.
Target: count from support to spring low, projected up.
Stop: One box above the upthrust high.
Target: count from resistance to upthrust, projected down.
Stop: One box below the shakeout low.
Target: count from support to shakeout low, projected up from breakout.
Stop: One box above the X in the formation.
Target: count across all , times B times R, projected down.
Trading Strategies
P&F supports systematic, rules-based trading with definitions for every pattern.
1: Double Top Trend Following.
Enter on double top breakout aligned with the higher-timeframe trend.
Stop one box below the separating O column.
Target via count of the breakout column.
the stop with each new O column low as the trend progresses.
2: Catapult Breakout.
Enter when the third column of the catapult breaks above the prior top.
Stop below the O column low.
Target via count across the full formation .
Higher than double top alone due to double confirmation.
3: Spring Reversal.
Identify a support level from prior O column lows.
Wait for a 1-3 box break below support.
Enter as the X column reclaims the support level on its way up.
Stop one box below the spring low.
Target via count from the support level.
4: Multi-Pattern Confluence.
Trade only when two or more patterns align within 5 .
Use a 1.5x standard for the combined position.
Take tiered profits at 1x and 1.5x the count.
with the fewest of any .
5: High Pole Counter-Trend.
Identify a column 3x or more the 20-column average height.
Wait for a full counter-column to the reversal.
Enter on the first after confirmation.
Stop at the extreme of the high pole column.
Target a 50% of the high pole height.
This is an advanced requiring significant experience.
Strengths & Advantages
P&F offers analytical advantages that no other chart type provides.
These strengths derive from the choice to discard time as an organising dimension.
- > Maximum noise filtration: Every element on a P&F chart is a confirmed, significant .
- > Sub-increment fluctuations and sub-reversal counter-moves are invisible by construction.
- > pattern recognition: Every pattern is defined by unambiguous column structures.
- > Ideal for algorithmic trading, systematic , and quantitative development.
- > Rich pattern vocabulary: Over 30 named patterns developed over 130 years of continuous analysis.
- > Each pattern has mechanical entry , stop placement rules, and profit target formulas.
- > trend lines: The 45- has a precise mathematical definition.
- > A break of the 45- line by a full column signals an trend reversal.
- > price targets: and vertical counting methods provide mechanical targets.
- > No external tools like Fibonacci retracements or measured moves are required.
- > Supply and demand visualisation: X show demand, O columns show supply directly.
- > Column height reveals the conviction of the controlling side in real time.
- > Complete time independence: P&F removes time as an organising dimension entirely.
- > A chart covers 1 day or 1 year with equal analytical validity.
- > -market universality: Rules are identical across equities, forex, , and crypto.
- > No market-specific adjustments needed because the method depends only on .
- > Extensive literature: 130+ years of development from deVilliers (1933) through Dorsey (2018).
- > Orthogonal perspective: Completely different analytical view from charts.
- > Using P&F alongside candlesticks provides two independent perspectives on the same .
- > Mechanical stop placement: Every pattern has a rule.
- > Stops are always one box beyond the pattern\'s defining extreme.
- > All-timeframe suitability: Works for intraday, swing, and position trading.
Limitations & Caveats
Despite its strengths, P&F has limitations that require awareness.
The method’s design choices create specific weaknesses needing complementary analysis.
- > Steepest learning : Unique construction rules and 30+ patterns to master.
- > Requires unlearning thinking habits from other chart types.
- > No time context: No information about when events occurred.
- > analysis requires a companion chart.
- > Subjective parameter selection: Different box sizes produce fundamentally different charts.
- > A stock may show a double top with $0.50 boxes but nothing with $1.00 boxes.
- > Reduced utility in ranges: P&F produces congestion with few signals.
- > Less useful in range-bound conditions until a breakout occurs.
- > No OHLC information: Only discretised price direction is recorded.
- > Wicks, gaps, and close location are completely lost in the construction process.
- > Indicator incompatibility: , MACD, and stochastic oscillators are designed for .
- > They cannot be directly applied to P&F column without significant adaptation.
- > Intraday difficulty: Volatility varies throughout the trading day.
- > A box size for the morning may be wrong for the afternoon.
- > Gap invisibility: Price gaps are not visible on P&F charts.
- > Two charts with and without gaps may produce identical P&F outputs.
- > Algorithmic : Automated pattern detection requires sophisticated logic.
- > Pattern variations and false positive avoidance require significant code investment.
- > Perception challenges: Some traders dismiss P&F despite proven institutional .
- > Requires conviction to use consistently when peers may be sceptical.
- > No overbought or oversold : P&F provides no internal trend extremity indicator.
- > The high pole pattern identifies exhaustion but only after it has occurred.
Comparison With Related Types
Understanding how P&F relates to other helps choose the tool.
Each chart type makes different trade-offs between information and filtration.
Combining methods effectively requires understanding these trade-offs.
Multi-Timeframe Analysis
P&F uses different box sizes for different analytical perspectives.
The three-chart system uses 0.5x, 1x, and 2x the standard box size.
Fast chart at 0.5x provides fine for entry timing.
Primary chart at 1x provides the main analytical view.
Slow chart at 2x defines the dominant trend direction.
When all three align, the signal carries exceptional weight.
Conflict between charts suggests reduced position size or skipping.
An alternative pairs P&F with candlesticks.
Use candlesticks for macro context and P&F for timing and targets.
A third method varies reversal amount instead of box size.
R=1 for sensitivity, R=3 standard, R=5 for maximum filtering.
Set up three charts in Quatick. Enter on fast pattern.
Size based on primary chart. Verify trend on slow chart.
Price Objectives Deep Dive
The and vertical count methods are unique to P&F charting.
They provide mechanical profit targets needing no subjective judgment.
Every pattern has a target from the chart structure.
count measures congestion zone .
Logic: the longer price consolidates, the further it travels.
Formula: ZoneWidth x B x R, projected from the breakout.
Example: 10-column zone, $0.50 boxes, R=3 gives $15 .
Breakout at $52 targets $67.
count measures breakout column height.
Logic: breakout conviction determines move extent.
Formula: ColumnHeight x B x R, projected from the breakout.
Example: 8 X’s in breakout, $1 boxes, R=3 gives $24 .
Breakout at $157 targets $181.
The most reliable targets come from of both methods.
This is independent confirmation from two perspectives.
When divergent, use for wide of 6+ .
Use for narrow of 3-5 .
Take partial profits at the conservative target.
Use the target for trailing the remaining position.
P&F in Different Market Conditions
P&F performs differently across market environments.
The skilled practitioner adjusts parameters and approach to the regime.
Strong Trending Markets: P&F excels with standard parameters.
Long extend cleanly. Patterns occur reliably.
Trade aggressively with full position sizes in the trend direction.
Ranging Markets: Reduce box size by 0.5x for more sensitivity.
P&F produces congestion with few signals.
Do not trade within . Wait for clean breakout.
High Volatility Markets: Increase B to 1.5-2x .
Consider increasing R to 5 for maximum filtering.
This is a defensive configuration for capital preservation.
Low Volatility Markets: Reduce B to 0.5-0.75x standard.
Use -based for automatic .
Breakouts after congestion are often explosive.
Crisis Markets: Extreme may form as high poles.
Do not fade extreme moves. Wait for full counter-column confirmation.
Prioritize risk management over signal generation.
Advanced Techniques
Beyond foundational patterns, P&F supports advanced quantitative techniques.
P&F: the price/benchmark ratio as P&F.
A double top breakout signals the is outperforming.
Central to Dorsey Wright sector rotation .
Volume Confirmation: Aggregate volume per column.
to the 20-column .
Volume 2x above average indicates institutional .
Declining volume in a trend suggests weakening conviction.
on P&F: Compute mean and std dev of column midpoints.
Over a rolling window of 20 .
beyond +/-2 standard deviations are statistically extreme.
A squeeze during congestion predicts an explosive move.
Algorithmic Scanning: P&F patterns are ideal for .
Scan thousands of instruments for new triggers nightly.
Rank by zone , volume, and trend alignment.
Wyckoff Integration: Springs = Last of Support.
Upthrusts = Last of Supply.
Congestion = accumulation or phases.
Column Moving Averages: 10-column MA of column highs.
Provides support in uptrends.
Pullbacks to the MA offer re-entry opportunities.
A close below the MA signals potential trend weakening.
Psychology of P&F Trading
Trading P&F requires a specific psychological approach.
This differs significantly from discretionary trading.
The primary benefit is objectivity and emotional detachment.
Every pattern has a rule. Every entry has a defined stop.
Every trade has a calculated target. No discretionary decisions.
This eliminates most emotional trading errors.
The primary challenge is patience.
P&F generates fewer signals than charts.
A trader used to daily setups may feel P&F is too slow.
This feeling must be resisted. Fewer signals are higher quality.
Another challenge is inactivity during congestion .
When alternate without , there are no signals.
The disciplined P&F trader does nothing.
This inactivity is uncomfortable but essential.
Target discipline is another critical psychological factor.
Taking profits too early or running past targets undermines the system.
Use the calculated targets as planned exit levels.
The trader who masters P&F psychology develops calm systematic trading.
This approach carries over to all other aspects of market .
Backtesting P&F Strategies
P&F’s mechanical rules make it uniquely suited for .
Every pattern has unambiguous entry, stop, and target .
These can be coded directly into a engine.
The key challenge is preparation.
P&F requires OHLC as input.
The backtester must reconstruct column structure from raw .
Use the same algorithm as the charting system.
should be approached carefully.
Test box size from 0.5x to 2x in 0.25x steps.
Test reversal amounts of 1, 3, and 5.
Use a multi-year dataset for robust testing.
Validate on out-of-sample not used in .
Common for P&F strategies.
: expect 55-65% for double top strategies.
Average risk-reward: expect 2:1 minimum.
Maximum consecutive losses and .
Survivorship bias is a particular concern.
Ensure datasets include delisted instruments.
P&F targets may be larger than realized moves.
Use conservative target calculations in .
Quatick Charts Pro provides a engine.
Historical playback evaluates pattern recognition quality.
trade for at least 50 signals before trading live.
P&F vs Traditional Indicators
Traditional technical indicators face challenges when applied to P&F .
Most indicators were designed for evenly-spaced time-series .
P&F are not evenly spaced in time.
This creates fundamental incompatibility with standard implementations.
on P&F: RSI over the last N instead of N periods.
This adapts to column-based but changes its properties.
MACD on P&F: MACD over column values with .
The resulting signals differ from MACD and require recalibration.
Moving Averages on P&F: over column close or midpoint values.
A 10-column MA provides support and resistance levels.
This is one of the most useful adaptations for P&F traders.
on P&F: Work naturally with column-based .
Use column midpoint values over a 20-column .
Bands identify statistically extreme and potential reversal .
adapt well because volume per column is meaningful.
OBV and volume-based calculations transfer naturally to P&F.
The general principle: adapt indicators to , not periods.
Always recalibrate thresholds and parameters when adapting indicators.
Simple indicators adapted to often outperform complex adaptations.
Common Mistakes
Even experienced P&F practitioners make these common errors.
Each mistake is documented with consequences and the correct approach.
The most common is abandoning mechanical objectivity for discretion.
Frequently Asked Questions
These cover the most common of confusion for new P&F traders.
Review them periodically as your understanding deepens with practice.
References & Further Reading
The P&F literature spans over 90 years of continuous development.
These works represent essential reading from theory through modern applications.
- 1.The Point and Figure Method — Victor deVilliers, 1933. Original 3-box reversal codification.
- 2.Point and Figure Charting: The New Approach — Alexander H. Wheelan, 1954. Catapult and high pole patterns.
- 3.Point and Figure Charting: Essential Application — Thomas J. Dorsey, 2018. Modern sector rotation and RS analysis.
- 4.Technical Analysis of Stock Trends — Edwards & Magee, 2018. Classic reference with P&F coverage.
- 5.Technical Analysis of the Financial Markets — John J. Murphy, 1999. Comprehensive P&F chapter.
- 6.Wyckoff Methodology in Depth — Ruben Villahermosa, 2019. Wyckoff for P&F interpretation.
- 7.Encyclopedia of Chart Patterns — Thomas N. Bulkowski, 2016. P&F pattern statistics.
- 8.Study Helps in P&F Technique — Charteraft, 1965. Practical manual from manual charting era.
- 9.The New Science of Technical Analysis — Thomas DeMark, 1994. Parameter optimisation approaches.
- 10.Quatick Charts API Documentation — Quatick Documentation. Pattern recognition API.
- 11.Nasdaq Dorsey Wright Research — Nasdaq, 2015-present. Institutional P&F research.
- 12.Trading Systems Development — Lars Kestner, 2003. Framework for P&F strategy backtesting.
Native Quatick implementation and live demos
The charts below are the real Quatick engine (@quatick/quatick-charts), the same code the trading terminal runs, fed by a deterministic simulated market. Switch between demos, press Run market to stream ticks, to pan and use the wheel to zoom. Show code exactly the calls each makes.
How the engine draws Point & figure
| Stage | What happens |
|---|---|
| in | bars |
| → chart.update() | |
| Box size ( / / %) | |
| N-box reversal | |
| X / O column slot series (incremental cache) | |
| Step 4 | Slot → x on an index |
| Canvas 2D | |
| Layers | Forming element · Last- · |
| updates | Amortised O(1): only the tail of the slot series is rebuilt |
How data reaches the screen
Minimal implementation
The first above, as standalone code:
import { Chart } from '@quatick/quatick-charts';
const chart = new Chart({
container: document.getElementById('chart')!,
chartType: 'point-figure',
theme: 'dark',
renderer: 'canvas',
showVolume: true,
});
const series = chart.addSeries({ type: 'candlestick' });
chart.setData(series.id, bars); // [{ time, open, high, low, close, volume }] — time in seconds
chart.setChartTypeOptions('point-figure', {
boxSizeMode: "traditional",
boxSize: 10,
reversalAmount: 3,
showGrid: true
});
// Live: every tick updates the forming bar (a new time opens a new bar)
feed.onTick(bar => chart.update(series.id, bar));Quatick settings reference
Loading the settings list…
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