Why Point and Figure for Forex Trading?
What is the only thing in trading that matters? Price.
So why does almost every type of charting take time into consideration? Should it matter if it take 30 minutes for the EUR/USD to go up 60 pips or if it takes 30 hours? Not really. The important thing is that it went up 60 pips.
This is why Point and Figure is so amazing. The only factor in the movement of the chart is price. That is a major reason why point and figure is a great method for charting but their are several more.
It helps filter out the “noise” or small price movements that can be distracting on other charts. This is because of the 3 box reversal. One of my favorite charts to trade is the 10 pip box. This means it takes 30 pips before there is ever a reversal in the chart but only a 10 pips to continue on with the column. This filters out the small movements in the price and allows you to focus on only the major moves.
The columns of X’s and O’s could not be make it easier to see buy and sell signals. It also clearly shows support and resistance and makes it so there is no confusion. This in and of itself is a huge benefit.
You add all of those up and then add on a few technical indicators, which I will discuss later, and you are headed in the right direction for a profitable trading system.
What are your reasons for or against using point and figure charts in trading the forex?