Understanding Point and Figure Charting and how you Can Trade Profitably

• Point and figure charting is a technique of tabulating movements or trends in forex trades through listening to voices emanating from forex broker‘s voices boxes.

• This technique is not always used by personal, but professional forex traders.

• Unlike in the past when the trends were manually draw on a graph paper, these days, traders use state of the art software that auto plots for them.

• Point and figure chart offers the trader important guidance on the trades to take based on the trends noted. This method remains one of the best for those who want to learn how the market is trending.

• Point and Figure Chart Benefits 

Just like the online real time forex trading charts, there are a number of benefits which point and figure charting offers.

• This method of trend analysis does not have an occurrence time because both axes of the chart are price dependent.

• Here are some of the major advantages of using point and figure charting technique of trend analysis.

• It's simple to construct.• Because time isn't charted, price is the only

thing that matters.• The price reversals of a chosen size matters

thus helping in smoothing the chart• Sell and buy signals are clearly generated.• Easy to identify trend movements.• Price objectives can easily be computed.

• Useful Chart Patterns

By looking at common patterns displayed on point and figure charts, an experienced forex trader can generate signals for buying and selling for the pair of currency which allow the traders carry on with greater objectivity.

• Forex traders can work out the price objectives using horizontal or vertical box counting method. Here are some important chart patterns which you will find useful.

• Buy Signals

This is characterized by a higher bottom followed by a higher top. They cover signals such as Bullish Triangle, Spread triple Top, Triple Top, Double Top, Low Pol, Long tail down and Bullish Catapult.

• Buy Signals

This is indicated by a lower top followed by a lower bottom and among the popular trends are Triple Bottom, Double Bottom, High Pole, Bearish Triangle, Spread Triple Bottom and Bearish Catapult.

Using the Trend to Trade profitably

• After the trend is generated, forex trader may still opt to trade against it. This is the scenario when the signal isn't in agreement with the underlying trend. There is high probability when you trade following the patterns produced by the underlying trend.

To do an assessment of a bullish market, a forex trader should draw a line upwards at the angle of 45 degree starting from the point the previous low was last recorded. Any signal above this point would be ignored and buy signals can be taken.

• However, if you want to access a bearish market, you will have to draw a line at 45 degrees going downwards from the last preceding high point.

• Any signal that asks you to buy which is above the line you have drawn should be ignored. Any available sell signals can be traded on. Traders should be keen to detail when doing this.

• If you are a forex trader and trades on the Metatrader 4 trading platform, you will not have access to point and figure charting because it does not comes within the standard charting package. You can gain access to point and figure charting by downloading the mt4 point and figure chart indicator here.

• http://www.forexchartistry.com/pointandfigurecharting