Intraday trading techniques
by John W. Labuszewski and John E. Nyhoff
Many analysts find that the charting techniques that they rely on for inter-day trading are somewhat
less useful on an intraday basis. As a result, these analysts often rely on other charting methods, including
point and figure charting and "pivot point analysis."
Point and figure charting
Point and figure charting is a frequently referenced charting technique which may be used to plot price
fluctuations on an interday or an intraday basis. For our purposes, however, we will restrict our
consideration to intraday data.
Point and figure charts are characterized by a series of Xs and Os arranged in columns (Figure 1). The Xs
represent price advances while Os represent price declines. Point and figure charts are considered useful
because, if properly constructed, they filter out spurious price fluctuations. Because of this intrinsic
filtering mechanism, the chart does not provide full information with respect to all (or at least small)
price fluctuations. Nor does it provide any information with respect to the time at which particular
fluctuations took place.
Let us consider how one might construct a point and figure chart and interpret it. One begins a point and
figure chart with a piece of graph paper showing a series of columns and rows. The next and most critical
step is to identify one's "box size" and "reversal" criterion.