What is a Point and Figure Chart?

Understanding Point and Figure Charts

Point and Figure (P&F) charts plot price without time, focusing on box-sized moves. X-columns represent rising price; O-columns represent falling price. They filter noise and emphasize trend and breakout levels.

Using P&F Charts

Traders set box size and reversal amount (commonly 3 boxes). Signals include double-top breakouts (bullish) and double-bottom breakdowns (bearish). Add trend lines along columns to visualize momentum shifts.

Considerations

Because P&F ignores intraday swings, it suits swing and position traders. Combine it with standard charts for entry timing and risk planning.

Practical Playbook

• Define context on higher timeframes, then execute on intraday charts.
• Wait for confirmation (acceptance, momentum, or confluence) before entry.
• Size positions conservatively and place stops at clear invalidation levels.
• Adapt to session dynamics; conditions shift between Asia, London, and New York.

Common Pitfalls

• Forcing trades without alignment across timeframe, structure, and catalyst.
• Ignoring spreads/slippage during news or thin liquidity.
• Moving stops or adding to losers instead of honoring the plan.

Illustrative Example

Build a simple playbook: identify bias, mark key zones/levels, define triggers and invalidation, and pre‑set targets for 2–3R. Journal results by session and setup to refine rules. Over time, consistency—not prediction—drives outcomes.

Practical Playbook

• Define context on higher timeframes, then execute on intraday charts.
• Wait for confirmation (acceptance, momentum, or confluence) before entry.
• Size positions conservatively and place stops at clear invalidation levels.
• Adapt to session dynamics; conditions shift between Asia, London, and New York.

Common Pitfalls

• Forcing trades without alignment across timeframe, structure, and catalyst.
• Ignoring spreads/slippage during news or thin liquidity.
• Moving stops or adding to losers instead of honoring the plan.

Backtesting and Metrics

Backtest Kagi rules across multiple pairs and regimes. Track win rate, average R, drawdown, and sensitivity to reversal size. Confirm that combining Kagi bias with execution‑chart confirmations improves expectancy versus a baseline approach. Update parameters when volatility regimes shift so signals stay timely without over‑trading.

Case Study

On EUR/USD, daily Kagi flipped to yang after a breakout on policy divergence. A pullback into the prior Kagi flip level coincided with London open; a 1‑hour reclaim and rising tick activity provided the trigger. Entry on the retest, stop below invalidation, first target 2R at range highs, runner to the next Kagi swing. When CPI shock thinned Kagi to yin, the runner was closed. Using Kagi for bias and levels—and session timing for follow‑through—kept risk controlled and avoided chasing noise.