Comparing P & F charts to bar charts: How to request Time-Extended Point & Figure data
FDC has a function whereby you may link and compare point & figure chart methods with bar charts. This method was first illustrated by one of our principals Dr. Robert Busby in the January 2005 issue of Technical Analysis of Stocks & Commodities.
Until that article appeared, P & F charts were considered only the end product of research. That is, once a P & F chart was created, there was nothing that could be done with it, other than to look at it. However with the FDC function pftime you may obtain useful data which can then be used as all other data. That is, you can now design trading systems using it, and simulate those systems to test profitability.
Here’s the syntax:
4 0 1 10 3 pftime ibm
Note that there are five fields preceding the word pftime. These represent as follows:
[Data column] [Data column] [Type of box] [Height of box] [Boxes for reversal]
The first two specify the columns of a dataset to be used in the point & figure construction. If you use the “classical” method employing the highs and lows, these first two fields should be 2 3. If you use close-only point & figure, then use 4 0. Should you have only a 1-column dataset, then use 1 0.
The third field specifies the type of box size. That is, will the box size be fixed or variable. If the P & F boxes are to be considered fixed, enter a value of 1. If they are to be logarithmic, enter 2. If they are to be the “classic” method espoused by Tom Dorsey, enter 3.
The fourth field describes the height of the box. If the box type is linear, then specify the unit size of the box (i.e. 10 points). If the box type is logarithmic, specify the percentage, and specify 0 if the classic method is used. If you choose logarithmic, the range of data included in each box above the lowest box will increase by the percent specified.
The fifth field describes the number of boxes for a reversal. For example, in the “classic” method, the box reversal number should be 3.