What are Point and Figure charts? And why are they good for me?
The Point and Figure chart (an example for West Texas Intermediate crude oil futures, traded on NYMEX, is shown here) is used to identify price breakouts. These breakouts can be to the upside or to the downside—in either case potentially producing large profit opportunities.
Mechanical rules free the trader from worry about when to act. (How to act is another matter, which is why point-and-figure charting should not be treated as just a gimmick.)
The arrows show when a trader might have purchased a 100-barrel WTI contract at $72 per barrel during the last week of December 2021, and closed the position at $100/barrel during the first week of April 2022. This would have produced a profit of $2,800 on a margin of $1,670, which is the kind of opportunity that makes trading oil (and other commodities) a very lucrative proposition.
If you like trading breakouts, it will be worth your while to learn more about Point and Figure charting. You can start with Thomas Dorsey's Point and Figure Charting book as well as with articles on the Investopedia and Stockcharts websites.
In future articles here I'll talk about how I use the charts to optimize profits and limit drawdowns.
Mechanical rules free the trader from worry about when to act. (How to act is another matter, which is why point-and-figure charting should not be treated as just a gimmick.)
The arrows show when a trader might have purchased a 100-barrel WTI contract at $72 per barrel during the last week of December 2021, and closed the position at $100/barrel during the first week of April 2022. This would have produced a profit of $2,800 on a margin of $1,670, which is the kind of opportunity that makes trading oil (and other commodities) a very lucrative proposition.
If you like trading breakouts, it will be worth your while to learn more about Point and Figure charting. You can start with Thomas Dorsey's Point and Figure Charting book as well as with articles on the Investopedia and Stockcharts websites.
In future articles here I'll talk about how I use the charts to optimize profits and limit drawdowns.