Back on January 2 I wrote this:
No, not this blog.
The Enantiodromia blog has an update, with the first post since the end of February 2010. Motorway’s blog contains information, insights, and wisdom that you will not find anywhere else.
if you want to give yourself the very best chance of reading and pre-empting price moves, you cannot afford to miss Motorway’s teachings.
Well, I am happy to be able to report that it has happened again, the Enantiodromia blog has a new article posted.
The article is: Why do People not use Point and Figure ?
and here is the link: http://enantiodromian.blogspot.com/2011/01/why-do-people-not-use-point-and-figure.html
OK, so Motorway asks “Why do People not use Point and Figure ?”. He uses this question, I think, as a rhetorical device, although I am sure he asks himself the question in earnest sometimes, as do I.
A related question, one which a reader of this blog might be asking her or himself is “Why use Point and Figure?”. I think the answer is found in the last lines of Motorway’s post, here:
My point is what is the best tool to reveal the Trend Component at ANY SCALE..
What is the best measure of reality..
We need with clarity to SEE BEHAVIOR and then to timely recognize
CHANGE IN BEHAVIOR .
Then act appropriately and profitably.
Point and Figure charts are very, very simple to learn to construct. They take a bit of getting familiar with because they are a method of drawing a chart different to any other method, but, really it should take no more than a 5 minutes or so to learn how they are drawn. They are best constructed from tick data (IMHO, but there are some uses to which non-tick data can be put in drawing a P&F chart … these are not my preferred option, though).
Now, while a P&F chart is easy to construct, understanding the principles of what it is they are doing with the data takes a bit more. I have corresponded with Motorway; he is a very kind and generous person, sharing his knowledge freely, and over time I have come to a much better understanding of what a P&F chart is helping to show, and how it shows it. I would really love to recommend a book or two to hasten this understanding, but I know of none that are helpful beyond the most rudimentary information showing how a P&F chart is constructed. Yes, I know there are huge tomes discussing P&F charting, but beyond showing how to construct the chart I can’t recommend any of them.
Any knowledge, insights and wisdom I have about P&F charting comes from my correspondence with Motorway and my own observations and work.
I would urge any trader to work with the P&F chart of the instrument(s) she or he is trading.