The Point & Figure (P&F) Trading Strategy is a unique, time-independent charting method focused solely on price movement. Unlike traditional charts, P&F charts filter out noise and time, allowing traders to visualise clear trends, breakout levels, and reversals without the distractions of market volatility or volume fluctuations. Originally popularised by floor traders, P&F remains a powerful tool for modern swing traders, trend followers, and position traders.

This strategy offers high-clarity signals and is especially effective for identifying breakouts, support/resistance zones, and measured price targets with precision.

What Is a Point & Figure Chart?

A Point & Figure chart uses columns of Xs (rising price) and Os (falling price) to represent price changes. Time is not a factor—a column only changes when price reverses by a defined amount.

Core Elements:

• Box size: The fixed amount price must move to print a new X or O
• Reversal amount: Number of boxes required for a reversal (commonly 3)
• X columns: Represent upward price moves
• O columns: Represent downward price moves

For example: On a 1-point box size with 3-box reversal, price must move 3 points in the opposite direction to switch columns.

Why This Strategy Works

• Filters out market noise and minor retracements
• Highlights major trends, breakouts, and support/resistance levels
• Offers precise entry/exit rules without time bias
• Ideal for systematic and objective trading

Point & Figure charts are straightforward, rule-based, and excellent for visual pattern recognition.

How to Use the Point & Figure Trading Strategy

1. Choose a Suitable Box Size and Reversal Amount

Box size and reversal settings depend on the instrument and timeframe:

Style	Box Size	Reversal	Best For
Scalping	0.5 – 1 pip/point	1 or 2-box	Short-term setups
Swing Trading	1 – 5 pips/points	3-box	Medium-term trend trades
Position Trading	5 – 10 points	3–5-box	Long-term trend following

Tip: Use ATR to help determine box size.

2. Identify Key P&F Patterns

Double Top Breakout (Bullish)

• Two matching highs (X columns), then a breakout above
• Signal: Long entry above resistance

Double Bottom Breakdown (Bearish)

• Two matching lows (O columns), then breakdown below
• Signal: Short entry below support

Triple Top/Bottom

• Stronger confirmation than double patterns
• Reliable for breakout continuation

Bullish Catapult

• Higher low followed by double top breakout
• Strong continuation pattern

Bearish Catapult

• Lower high followed by double bottom breakdown

Support and Resistance Zones

• Horizontal areas where patterns repeat
• Useful for limit entries or stop-loss placement

3. Execute Trades with Clear Entry Rules

Entry:

• Buy on confirmed double or triple top breakout
• Sell on confirmed double or triple bottom breakdown
• Enter only when the new X or O confirms the breakout or reversal

Stop-Loss:

• Below last O column (for long trades)
• Above last X column (for short trades)
• Or, use the opposite end of the breakout pattern

Take-Profit:

• Measured move targets using P&F price projection
• Next support/resistance zone
• Trail stop below recent swing columns

4. Apply Price Target Projections (Vertical Count Method)

Bullish Projection:

1. Count number of Xs in the base column before breakout
2. Multiply by box size and reversal amount
3. Add result to breakout level

Bearish Projection:

1. Count number of Os before breakdown
2. Multiply by box size and reversal amount
3. Subtract from breakdown level

This method gives a quantitative target for each breakout.

5. Add Confluence for Stronger Setups

To improve accuracy:

• Use Volume Profile or VWAP for bias
• Combine with traditional support/resistance zones
• Look for divergence or fundamental triggers around P&F signals

P&F is clean and mechanical, but confluence adds context.

Best Markets and Use Cases

Markets:

• Forex (EUR/USD, GBP/JPY, AUD/USD)
• Futures (ES, CL, NQ, GC)
• Stocks and indices
• Cryptocurrencies (BTC/USD, ETH/USD)

Ideal for:

• Swing trading breakouts
• Long-term trend following
• Clear systematic setups without noise

Strategy Summary Table

Component	Details
Chart Type	Point & Figure (X and O columns)
Entry Methods	Breakouts (double/triple tops or bottoms)
Trend Indicators	Pattern structure and column progression
Stop-Loss	Beyond recent column high/low
Take-Profit	Price projection via vertical count
Best Use	Swing and position trading with structure clarity

Conclusion: Trade with Clarity Using Point & Figure Charts

The Point & Figure Trading Strategy gives traders a unique edge by focusing purely on price direction and structure. It filters out intraday noise, removes time bias, and provides clean signals that are easy to interpret and execute. Whether you’re trading breakouts, reversals, or trend continuations, P&F charts deliver a disciplined, rules-based approach that stands the test of time.

To master this and other advanced charting methods, enrol in our Trading Courses at Traders MBA and learn how to combine timeless strategies with modern market insights.