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book suggestions for price channels

I want to get a better understanding of how to trade using price channels. best suggestions?

Comments

  • I don't have any books to recommend but I will say that you picked a great indicator to get acquainted with, in my opinion. I say this because it's one that shows up ON the PRICE chart panel section of the charts. It's not above or below the chart. It's a great indicator, AND it can tell you so much. They are also great to use on some other indicators if so inclined to use other indicators.

    I wasn't a fan of them until I started to use them after reading one or more of @markd's helpful missives that he writes from time to time in these forums. They trace out exactly what most trend followers need to know. Higher and lower highs and higher and lower lows. Trend or congestion areas. The Price Channel can greatly assist in visualizing what is going on with the most important aspect of a chart, the price.

    I believe that anyone who uses Wyckoff, or Elliot Wave, or pretty much any "style" analysis is lacking a solid tool if not using Price or Donchian channels on their charts. The reason that they don't is because nobody told them to in a book or a video.

    I think that the "turtle traders" used the indicator to allegedly spectacular results. Maybe search for that term for helpful texts? I think that it's possibly the best indicator on a price chart. My other 2 favorite price panel indicators would be a Linear Regression Channel, but those aren't in the SharpCharts indicators yet on StockCharts.com. They do have a stuff in the Annotation area but that's no fun for me. The other is the ZigZag indicator, which is fun for me.
  • What settings do you recommend for the price channels? ... assume Daily chart, swing trading.
  • Pick ones that match your system. On a time chart, I tend to use longer term looks, so a 10 week would be the shortest I would go, so I usually have a 10 or 15 and 26 week on the weekly chart. My idea of the indicators isn't to fit the chart to the indicator, but to fit the indicator to the system. On some systems, it makes sense to shorten the periods and on some it makes sense to lengthen. The idea is to get something that gives "important" indications for your system. Not too many, and not too few. Too many and you will begin to ignore them. Too few and you will get bored and move on.

    So... if you are looking for ACTION because you have to play all the time, pick a period that provides the opportunities that match your needs. Day traders are going to have different "needs" than a longer term indicator will provide.

    My idea is that the markets will provide 3 or 4 decent entries per year. Set your indicators on a market chart to find those and you will be in sync with the markets.



    Now, your intended target probably will provide a similar amount of opportunities with the appropriate settings. I offset the short period price channel so white space at the top channel indicates pullback.

    So the best settings, in my opinion, are going to be the ones that provide you with the information that you need to operate your system.

    I use point and figure charts for the most part. Price Channels aren't an option there. Only PnF moving averages. I admire a 5%x2 Weekly close only and high/low chart with a 1,7,9,17 moving average on it.
  • markdmarkd mod
    edited September 14


    Thanks to @lmkwin for the kind words. I looked for some of those ancient posts to link to, but no luck. They might be there, but I can't find them.

    So, instead, I'll use the chart above to explain my thinking.

    For price channels, I use "calendar-based" parameters - 251 days is a year (gold channel - not visible b/c lower channel is off the chart, upper channel is under the others, you can see the dotted line mid-channel though), 63 days (green) is a quarter, 21 days (pink) is a month and 10 days (blue) is two weeks.

    If you are a cycle fan, you'll notice these are correlated to planetary periods. But I chose them because, after trial and error looking for "ideal" periods I found that nothing works all the time anyway, so why not go with numbers related to the financial reporting/performance measurements cycles (year, quarter, month). That doesn't mean the actual calendar dates are important - end of the month, end of the quarter, end of the year. But the length of time between price events does seem to be related (sometimes) to the length of each of those periods.

    When price is trending well (channels are consistently rising together, or falling together), it will often reverse when it hits an opposite channel (so, lower channel in an up trend, upper channel in a down trend). If it doesn't reverse at the first channel, it's likely to go to the next one, and so on.

    Sometimes, price doesn't quite make it to the first or next channel, so you don't get a signal. But, you can use Fast Stochastics to deal with that. For instance, on the chart above, there are 4 overlaid Fast Ks, corresponding to the 4 channels on the chart. When Fast K 251 is above 80 (stock is trending well, usually), Fast K 10 crossing below the 20 line is often a good entry. Likewise K21 below 20. Sometimes K63 below 50 or 20.

    (Fast Stochastics tells you where price is - as a percentage of the range - between the highest and lowest price over some period. Price Channels are drawn from those two prices as well, so Fast K (with 1 for a smoothing parameter - in other words, no smoothing) tells you where price is in the price channel, expressed as a number between 0 and 100.)

    On the chart above, February, March, May, June, July and August all had a K10 cross below 20 while K251 was above 80. February was a loser (early), but the remainder were all timely. There were also two time K21 below 20 signals, one in March, one in May. It so happens in each of these cases, price crossed the channel, but it doesn't always happen that way.

    So, you can do a quick and dirty scan for candidates this way:

    (select stocks that interest you - e.g. [group is SP500])

    and [Fast Stoch %K(251,1) > 80]
    and [ 20 x Fast Stoch %K(10,1)]

    Then you want to check each result visually for true trendiness and consistent price action.

    The method seems to work more reliably on well-established, institutionally traded stocks that have "sponsorship" - meaning, somebody (or a consortium of somebodies - Wyckoff's composite operator) has an interest in keeping prices relatively stable. But, there are also up and coming stocks with a following where it will work more or less, too. Of course an index behaves much more smoothly than individual stocks, and in the chart example the trend is very strong, so it works better than it might on an individual stock.


  • @markd, they would be pre-2018 posts. You often would suggest them as an answer to various scanning questions on the boards. I started using them on my time charts in 2018. I find them useful on the RS ratio panels as well.

    I know a lot of people and blog authors use the moving averages, and I often note that a price channel would greatly assist in their explanations of activity as well as provide the clearer indications that many are interested in. Higher and lower highs, higher and lower lows. Want to identify "divergences"? Put a Price Channel on the indicator and you will see them much easier, or I do at least. Not that I look for them, maybe I should, but Price Channels are a great tool to use for a myriad of purposes.

  • I agree - they are useful on indicators, too.
  • I just wish there was an arrow to skip to the next discussion thread instead of having to go back to the previous screen. It would make copying and pasting @markd 's responses much faster. I have read almost every comment I see him post about price channels including old S.C.A.Ns I have so much more to learn and he's honestly the best at explaining. I'm a tired Nurse doing this on the side and it's a pain to go back and forth in between screens and find my place again.

    @lmkwin I don't want the action I just want to be able to one day be able to switch from a full-time to a part-time nurse. COVID has definitely emphasized my need to leave the ICU hospital setting


  • So I bought MTBN on 9/19/2019.....I used to focus on fundamentals and to be honest, what happened afterward I now know was out of pure luck. Like a dummy, I held until I had lost 50% of my gains... (I didn't know even close to what I have learned about our stock market). Then COVID happened. Then GME happened, I have gained a fair amount of money but it seems that the market environment has shifted and I'm too scared to hop back in, but I also realize that I have to actively start trading it if I want to keep gaining....and be able to spend more time with my 2 girls.

    I have a couple of (male ) family members and friends who trade and make decent money but when I ask for suggestions (and know I said suggestions because we have to be conscious traders, not individuals who just follow the crowd), anyway when I ask them for suggestions they shut me down because I'm a woman, they won't directly say so but the responses they give imply it. Maybe it's too much info but I feel that it's necessary so that yall feel how deeply grateful I am that yall took the time to respond......

    Anyway since I started trading based on price channels I have gained a better understanding of price action (thank the Lord Jesus for @markd 's responses and explanation) my losses have decreased.... so based on my lucky buy on 9/2019. I wrote a scanner that has helped pick reversal/breakout stocks but I feel it needs some fine-tuning


  • @markd is a great teacher.

    @MARIVANILLA, you have an honorable goal. All you need is a decent system and the discipline to follow it and a cooperative market and it should allow you to turn from patient advocate to patient investor. All it takes is time and practice. I retired 5 years ago in my early 50's thanks to following a point and figure chart discipline that I developed over time.
  • edited September 14
    BELOW IS THE SCANNER IN QUESTION...
    LITERALLY ALL OF IT. PLEASE DON'T JUDGE ME, THE NOVEL I WROTE OR MY USE OF PLAGIARISM.... hahaha oh and I forgot about the comments I have made to myself trying to explain the reasoning behind the line LOL... :)

    SOMETIMES POSTING YOUR EXPLANATIONS HELPS ME RE-UNDERSTAND WHEN I GO BACK TO THE SCANNER....... (since COVID and nursing shortage I've been working up to 5/12hr shifts...understaffed and under-payed for sure)

    As noticed, most of my clauses are muted... I usually MUTE and Un-Mute clauses depending on what I "feel" that I'm looking for on that day. even though its a massive scanner I do have separate smaller scanners that I'm getting "daily reports on" and I will use for a shorter trade (MY STYLE OF TRADING IS SWING TRADING LONGEST HOLD AFTER MTNB HAS BEEN 2WEEKS)

    I ask for help on this scan in hopes that it also helps someone else out there.

    In my short years as a "part-time swing trader" I have learned the hard way that Simple is

    I LEARNED TO LOVE THE FOLLOWING (mostly because of @markd and @lmkwin @gord among other geniuses.... )

    PRICE CHANNELS
    BOLLINGER BANDS
    FAST STOCH %K 10/21/63/253 (I'm a copycat)
    ADX
    FORCE
    AND SHORT TERM EMA's

    To those who stick around to help I do want to say. Thank you in advance for your suggestions, and I am sorry about the long post, I felt that if I posted everything all at once it would help me and anyone that is trying to help

    I AM LOOKING TO IMPROVE THE SCAN IF POSSIBLE OR MAYBE DELETE LINES THAT AREN'T EVEN WORKING // OR NOT WRITTEN RIGHT...........

    ///////////////////////////////////////////////////////////////////////////////////////////

    [TYPE = STOCK]
    AND [country= US]
    AND [group is not ETF]
    AND [[EXCHANGE= NYSE] or [EXCHANGE= AMEX] or [EXCHANGE= NASD]]
    AND [CLOSE <= 50]// change the price depending on how risky or well the market is
    AND [TODAY'S VOLUME >= 300,000] // ideally above a million to ensure liquidity
    AND [Daily SMA(60,Daily Volume) > 100000]

    #and [todays low <= lower Price Chan(10)] and [todays low <= lower Price Chan(21)]
    #and [todays low < lower Price Chan(10)] and [todays low < lower Price Chan(21)]
    #and [todays close >= lower Price Chan(10)] and [todays close >= lower price chan (21)]
    #and [todays close <= middle Price Chan(10)] and [todays close <= middle price chan (21)]

    #AND [Daily Lower Price Chan(10) = Daily Lower Price Chan(21)]// This has helped ensure that the 10 and 21 bottom channels are flat ???? IDK maybe I'm not even doing it right but MARKD said

    #AND [Daily Open <= Yesterday's Daily Open] AND [Daily High <= Yesterday's Daily High] AND [Daily Close >= Yesterday's Daily Close] AND [Daily Low <= Yesterday's Daily Low]// might help to ensure that today's close was within consolidation parameters

    #AND [Daily Upper Price Chan(21) >= Yesterday's Daily Upper Price Chan(21)] AND [Daily Middle Price Chan(21) >= Yesterday's Daily Middle Price Chan(21)] AND [Daily Lower Price Chan(21) >= Yesterday's Daily Lower Price Chan(21)] // TOO SPECIFIC MAY NOT ADD IT unmute and try it out....8/8/21 self-update yeah I still haven't had the chance to try and see

    #AND [Daily Upper Price Chan(63) = Yesterday's Daily Upper Price Chan(63)] AND [Daily Middle Price Chan(63) = Yesterday's Daily Middle Price Chan(63)] AND [Daily Lower Price Chan(63) = Yesterday's Daily Lower Price Chan(63)] //// I noticed that the 10 and 20 make the biggest moves the 63 and 251 stay still when consolidating but are the first ones to show divergence...TOO SPECIFIC MAY NOT ADD IT, 7/3/21 yeah definitely too specific maybe it just needs tweaking

    #AND [Daily Upper Price Chan(251) >= Yesterday's Daily Upper Price Chan(251)] AND [Daily Middle Price Chan(251) >= Yesterday's Daily Middle Price Chan(251)] AND [Daily Lower Price Chan(251) >= Yesterday's Daily Lower Price Chan(251)] /// this line helps show when the long term trend is changing when MTNB was making lower lows starting July the lower 251 channel was trending up, a divergence started.....IDK my reasoning will ask one day

    #AND [Daily Fast Stoch %K(10,1) >= Yesterday's Daily Fast Stoch %K(10,1)] AND [Daily Fast Stoch %K(21,1) >= Yesterday's Daily Fast Stoch %K(21,1)] AND [Daily Fast Stoch %K(63,1) >= Yesterday's Daily Fast Stoch %K(63,1)] //// %fast stoch 10>21>63 when these aling it has show to be a strong uptrend....

    #AND [Fast Stoch %K(10,1) <= 20]/// fast stoch has helped me find really good dips on stong uptrends

    #AND [Daily Middle Price Chan(251) >= 21 days ago Daily Middle Price Chan(251)] ///shorter trend is increasing???IDK might not work

    #AND [Daily Lower Price Chan(251) = 14 days ago Daily Lower Price Chan(251)]//the bigger price channel has remained flat so no new dips

    #AND [Yesterday's Daily Lower Price Chan(10) = 2 days ago Daily Lower Price Chan(10)] AND [2 days ago Daily Lower Price Chan(10) = 3 days ago Daily Lower Price Chan(10)] AND [Yesterday's Daily Lower Price Chan(21) = 2 days ago Daily Lower Price Chan(21)] AND [2 days ago Daily Lower Price Chan(21) = 3 days ago Daily Lower Price Chan(21)]

    #AND [Yesterday's Daily ADX Line(14) <= 20] AND [Daily Plus DI(14) <= 20] AND [Yesterday's Daily Plus DI(14) <= 20] AND [Daily Plus DI(14) >= Yesterday's Daily Plus DI(14)]

    #and [[Upper Kelt Chan(20,2,10) > Upper BB(20,2) ] and [Lower Kelt Chan(20,2,10) < Lower BB(20,2) ] and [BB Width(20,2) = min(63, BB Width(20,2))]] or [BB width (20,2) < ATR(10)*3] or and [BB Width (20,2) < close * 0.04]

    #and [3 days ago max(3, ATR(3)) < 3 days ago max(7, ATR(14))]// will show stocks traiding in a narrow range using "and [3 days ago max(3, Full Stoch %K (14,3,3)) < 50]" will show if uptrend was after a decline
    #and [daily aroon up(5) crosses daily aroon down(5)]// will show the start of new uptrend
    #and [FORCE(251) < 0.0]//Force below zero means there has been previous distribution
    #and [Force(251) > sma(10, Force(251))]//// Force is above its moving average

    #and [Upper BB(20,2) <= Upper Kelt Chan(20,1.5,10)] and [Lower BB(20,2) >= Lower Kelt Chan(20,1.5,10)]//So for Daily squeeze

    #and [weekly Upper BB(20,2) <= weekly Upper Kelt Chan(20,1.5,10)] and [weekly Lower BB(20,2) >= weekly Lower Kelt Chan(20,1.5,10)]//For Weekly squeeze

    #and [monthly Upper BB(20,2) <= monthly Upper Kelt Chan(20,1.5,10)]and [monthly Lower BB(20,2) >= monthly Lower Kelt Chan(20,1.5,10)] /// "USED FOR A MONTHLY SQUEEZE I'd shorten up the 'monthly' periods but that is a personal preference thing. On ThinkorSwim they also offer quarterly charts. Same principle on the squeeze, but I'd shorten up the period again. 20 quarters or 20 months is certainly an indicator of long-term consolidation, but, probably better to use shorter period for actionable situations, if so desired."

    #and [close > 10 days ago close] and [close < 10 days ago close * 1.05] // "this line can be used to compare closes it says, TRADING IN A SMALL RANGE the line states that today's close greater than the close ten days ago, but less than 5 percent higher than the close ten days ago."

    I LOVE READING (when I get the time) SO ANY SUGGESTIONS WOULD ALSO BE GREATLY APPRECIATED!! AND MARKD IF YOU EVER WROTE A BOOK ON SCANNING PRICE CHANNELS JUST KNOW THAT I WOULD BE THE FIRST TO BUY...I do thank yall I know that for the most part... it's survival of the fittest when it comes to the stock market (between bots, market makers, and hedge funds there is little room for Dory's like me) so any genuine help is truly appreciated, hence I am truly grateful !!! <3<3<3
  • This is quite the smorgasbord scan.

    If you love ADX, check out Welles Wilder texts. He created many of the popular indicators. The Parabolic SAR is a great one that is plotted on the price chart panel.

    https://duckduckgo.com/?q=Welles+Wilder&amp;t=ffab&amp;iax=videos&amp;ia=videos&amp;iai=https://www.youtube.com/watch?v=CSCS70rzpiU

    Bollinger Bands? Check out John Bollinger instructions.

    https://duckduckgo.com/?q=john+bollinger&amp;t=ffab&amp;iar=videos&amp;iax=videos&amp;ia=videos&amp;iai=https://www.youtube.com/watch?v=cq3gkwin1y4

    or you can wait and hope that one day @markd writes a book.
  • markdmarkd mod
    edited September 18
    @MARIVANILLA , thanks so much for the kind words. I am very happy that you have found some of my posts useful.

    I'll go through your post and comment as there is time available.

    [TYPE = STOCK]
    AND [country= US]
    AND [group is not ETF]
    AND [[EXCHANGE= NYSE] or [EXCHANGE= AMEX] or [EXCHANGE= NASD]]
    AND [CLOSE <= 50]// change the price depending on how risky or well the market is
    AND [TODAY'S VOLUME >= 300,000] // ideally above a million to ensure liquidity
    AND [Daily SMA(60,Daily Volume) > 100000]

    I think you could edit this down:

    [TYPE = STOCK]
    *
    AND [group is not ETF]
    AND [[EXCHANGE= NYSE] or [EXCHANGE= AMEX] or [EXCHANGE= NASD]]
    AND [CLOSE <= 50] *
    *
    AND [Daily SMA(60,Daily Volume) > 100000]

    * If you specify the exchanges, I don't think you need to specify the country.
    * Not sure what you are getting at here - its the volatility (average range) as a per cent of price that matters. So a "calm" stock at 15 may be less risky (from volatility) than a "wild" stock at 50.
    * specifying a minimum one day volume could eliminate otherwise good candidates; daily volume can vary a lot. An average volume makes more sense.

    *****

    #AND [Daily Lower Price Chan(10) = Daily Lower Price Chan(21)]// This has helped ensure that the 10 and 21 bottom channels are flat ???? IDK maybe I'm not even doing it right but MARKD said

    If you want a price channel to be flat for some period of time:

    and [Lower Price Chan(21) = 10 days ago Lower Price Chan(21)]

    You can change the price channel parameter or the "days ago" parameter, but the "days ago" parameter should be less than the price channel parameter. If "days ago" is longer, the channel will have ticked up or down.

    If you want a rising price channel over some period of time:

    and [Lower Price Chan(21) = max(21,Lower Price Chan(21))]
    and [Lower Price Chan(21) > 30 days ago Lower Price Chan(21)]

    In this case, "days ago" should be longer than the price channel length. For a falling price channel, you would do the inverse - min(21, ...), < 30 days ago... Again, you can substitute your own parameters.

    *****

    #AND [Daily Open <= Yesterday's Daily Open] AND [Daily High <= Yesterday's Daily High] AND [Daily Close >= Yesterday's Daily Close] AND [Daily Low <= Yesterday's Daily Low]// might help to ensure that today's close was within consolidation parameters

    If you want prices within recent highs and lows, you could try:

    and [high < max(3, high)]
    and [low > min(3, low)]

    You could make max and min 5 or 10 or some other number.

    Or, you could look for contracting price channels over some period of time:

    and [Upper Price Chan(21) - Lower Price Chan(21) < 10 days ago Upper Price Chan(21) - 10 days ago Lower Price Chan(21)]

    *****
    I see many of the rest of your channel scans are looking for short term clues, ticks up or down in the channels. I don't have a problem with that if its working for you, although I think you would probably get a lot of hits that don't work out. I'm not sure what else you might need to narrow the choices. Maybe a test for contrary direction of a longer term MA - for instance, the 21 day channel ticking up while the 63 day MA is still falling, might indicate a change of trend is due, or, it might be counter trend strength that the trend will act against.

    ****

    Here is a longer term channel scan that you might do your research on. It looks for a three year breakout. What you hope to find is a stock that has bottomed out and is growing again.


    // as of last week's close, weekly close has not been above K 99 for three years
    and [1 week ago weekly max(156, weekly Fast Stoch %K(52,1)) < 90]

    // last week's UPC 52 is lowest in three years
    and [1 week ago weekly Upper Price Chan(52) = 1 week ago weekly min(156, weekly Upper Price Chan(52))]

    // this week's close breaks last week's 52 week high
    and [weekly close > 1 week ago weekly Upper Price Chan(52)]

    //and [weekly Fast Stoch %K(52,1) x 80]

    To research it, run it back dated from at least a year's worth of past Fridays (because its a weekly scan). You will see that many weeks it gets no hits, and it will get quite a few hits that don't work out. But the good ones can be very good.

    An example is Build A Bear, which first showed up 2/5/21. Here is a the weekly chart from a couple of weeks before the hit (a couple of weeks before b/c the volume on the hit week distorts the chart).



    Notice the deep selling on the left, which flushed out sellers, and the growing strength moving right. Notice the sellers can't get or keep prices below the lows of the tall grey volume bars. That's buyers supporting the stock.

    The circles show 1 - Force 251 got above its MA 251 (gold) and stayed above on selling thereafter and 2 - $SYMBOL:$INDUSTRY RS got above its 63 MA (green) also and stayed above it. So, by the time this scan found it, it was a strong stock already, but there was plenty more to go. That's what you want to look for - it is Wyckoffian accumulation.

    These types of hits are relatively few, but great when they happen. Once you find them, the K10 and K21 entries should be good. So, you need a lot of patience and dry powder for when they turn up. You will notice that the other two hits on the same date were ho-hum or bad. Many of them will be if they don't show the trendiness already in place for BBW.

    *****

    More suggestions below in separate answer.
  • lmkwinlmkwin ✭✭
    edited September 16
    I have NO specific advice to offer on expected 2 week hold systems. My holding periods are measured by the price and the pattern and applying patience. My average hold is over a year. That's the average. Some holds are longer and some are shorter. The chart will tell me when it's time to let go and when it's time to let it be.

    I used to be a trader. Won some online competitions back in the day. I look back at all the stocks I bought and sold back then .....and look at them now. Short term gains (or losses) at the expense of long term riches.

    Now, if I were buying penny stocks, I would have to have nerves of steel and tremendous discipline. If I am "afraid or scared" of something, then that doesn't sound like something I can have in a workable system over the long term. What could I do to alleviate the feeling of being afraid or scared? That would be a key component to consider in my system.

    On the MTBN example, the Price Channels clearly showed where lower tops and lower bottoms (a bearish trend) first turned to higher bottoms and (congestion area) and then higher bottoms with higher tops (a bullish trend). Then lower bottoms (congestion area) and then lower bottoms and lower tops (bearish trend) I would study this phenomenon to see if it can be exploited. With Price Channels it's also a good thing to note the middle line of the Channel. It's a dotted line. That's a 50% retracement. Although not a Fibonacci number, it's a good area to be aware of for possible turns, both up and down. Is that a good signal on this stock? Is it a good signal on other stocks I examine? Can I use this as part of my system?

    And of course I'd be remiss, if I didn't suggest that reviewing a Point and Figure chart could also be of assistance.

    This is a 5%x2 daily Close Only price chart. It has a 1 and a 7 column moving average shown. Also the Volume, Volume by Price and Reversal Marker are displayed.




    The 1 column MA bisects each column, so the midpoint of the column movement is very clearly displayed. A helpful visual as to higher highs and lows in my opinion. The 7 MA is the 7 column average of the 1 MA prices. I highlighted where 9/19/19 would be located on the chart. Of course, I can look at different percentages and reversals or look at the Traditional scale or look at the High/Low to see the data in a different light.

    3%x2 High/Low with 9/19/19 area highlighted





  • @MARIVANILLA, if you want to review a particular poster's comments or discussions, click on the poster's name



    and then click on the Discussions or the Comments links.

  • I emphatically agree that, especially if you are still young enough, the longer term is both more profitable and less time consuming. I also agree that P&F, once you master it, is much more efficient and probably more reliable than whatever collection of indicators you might settle on through trial and error. (I haven't gone that way because I discovered P&F long after I had invested a great deal of work in traditional approaches. I just don't have the energy to start over. Also, I enjoy "decoding" the market's behavior in a detailed, up close way, so it's not work to me.)

    The key to both, P&F and longer term investing, is patience - patience to wait for an opportunity to develop, and the patience to sit through drawdowns on the long term march upwards. I would guess that many people have traveled @lmkwin 's path to P&F - lots of active trading followed by the realization that you can get better returns with less effort with a long term perspective. When that realization dawns, the waits for trades and drawdowns don't seem so bad, considering the alternative. But when you are trading because you need money now, its hard to see the wisdom of waiting, even though its very likely you will come out ahead eventually.
  • I didn't start learning PnF until my 40's. Been a trader since my 20's. There is a price to pay for everything. There is a misconception on Point and Figure charts. That you have bigger drawdowns and that's not the case. The settings on the chart determine the appearance of the chart. Traders can and do use smaller box sizes. Professional money managers are very risk aware/averse. They use smaller box sizes. You can even set your preferred drawdown level as the box size, or... set it at half the preferred drawdown as the box size. The charts are all based on price and the settings. Once you learn to, at least, consult the PnF chart on a regular basis, is when you can become more comfortable with what it is telling you. If the chart looks too slow, speed it up by changing the box size or the reversal amount. I rarely go below a certain percentage but that doesn't mean it's best or better than anything else. The "pros" use 1% for stocks and 2% for ETF's and mutual funds. The PnF chart, just like ALL charts, use the same data, it's just a matter of how it's displayed.

    Or consult a different "noiseless" style chart like a Renko. It's kind of an in between from traditional time based charts and PnF. Once again, the settings are there to be played with to fit your eye. Both Renko and PnF can be set to ATR scaling. Something that you can't do on a time based chart.



    I also like that I can put the Gerald Appel "Magic Numbers" as horizontal lines on the Renko charts. You can't do that on PnF charts.

    As far as patience? That is used in my system. I didn't fully embrace patience until 2014. Far from a youngster. I had recognized it earlier but didn't come up with a logic way, to me, to work it into my system. It doesn't have to be a part of any system, but... over time, the rewards have certainly been well worth it. Age shouldn't matter, only temperament. Many come up with great ways to play the markets and then cut themselves short of achieving the full rewards of their system. I can't tell you how often the index managers at DorseyWright have put AAPL in and taken it out of their flagship ETF, PDP, in the last 10 years but it's a LOT. As long as that is understood as being a part of the system, then all is good.

    The Public ChartList I post on StockCharts.com is drawn from study portfolios that I maintain on DorseyWright.com's website. DorseyWright is mostly professional money managers and financial advisors. Although I'm neither of these, I've been a member there for a while.

    The study portfolios contain securities that have displayed a particular set of PnF chart characteristics from members of specific indexes. A pattern is what I call it, but it's really a series of patterns. They showed on the MTNB chart I shared. 3 or more consecutive sell signals followed by a column of X that is at least 7x's in length. I "find" them using the Traditional scale and 3 box reversal, but they do show on alternate scales. If using a 3%x2 scale, I recommend changing the 7xx to a 6 XX column length. The key is to look for the longer length columns for guidance as to what and where price is moving. So if the recent activity is showing column lengths of 2 or 3-5's and all of the sudden 6's and 7's lengths appear, it's something to be be aware of. Something has changed. Both on the Upside and the Downside. The moving average lines can assist in this analysis.

    Prashant Shah has written books that cover Renko and Point and Figure charts. Excellent teacher of the processes. He has a new book coming out called Outperforming the Markets Using Relative Strength and Breadth Analysis.

    He explains many of the popular indicators here

    https://www.definedge.com/indicators-simplified-prashant-shah/
  • IMKWIN -- how do we find your Public Chart List so we can follow it ??
  • lmkwinlmkwin ✭✭
    edited September 17
    https://stockcharts.com/public/1175948

    I just started working on manually adding chart notes to show where the 7xx appears for ease of identification. When I do my full end of month updates going forward, I will add the notes in on the import from the DorseyWright site.

    I do offer to share the full portfolios there for anyone that is a member there. Let me know and I'll a add you to that list. The full portfolios capture the buy date, the quantities and values in a real time study.
  • INKWIN --
    1 - yes, add me to that list ... azb1azb1
    2 - how and WHERE do youset up your P&F charts. I don't see any style setting to do this. Then is there a way to save it as a candleglance, so I can see an entire list at once.

    PnF is NOT well set up in the SC program.
  • @azb are you a member at DorseyWright? I'd need your DW email that is on that account to share the portfolios there. You can email me via the Feedback link on the public chartlist with the info.

    At the bottom of most every chart page are some links.


    Click on the Point & Figure link and it will take you to the PnF chart for that symbol. Settings are available there. If you change the settings and want to keep the new settings as your default, click on the Save as Default next to the ChartStyles dropdown. Also check out the predefined ChartStyles clicking the dropdown. They have many common starting points that may be sufficient for your needs.

    You can also access PnF charts at the top of the page.

    You can click on the Star next to the type that you want to default to when using that quote window. You, my friend, may want to set ACP as your default. I set Point and Figure.

    To have a CandleGlance view of the public lists, you would need to save the symbols into your lists. I do recommend reviewing the public chartlist section as there are some really good lists and ChartStyles and comments from some of the authors. If you like a list, "Follow" it. Then you get notifications when the list is updated. If you like it a lot, vote for it. The authors get additional options to use in displaying content if enough votes are received.

    The PnF chart on SC is better than most. The charts haven't changed in many, many years. They haven't implemented any suggestions for improvements I've made in the past 5+ years. Prashant Shah's Definedge has the best PnF charts I've seen but they only cover the India markets.
  • markdmarkd mod
    edited September 18
    @MARIVANILLA

    Here's a scan skeleton you (or anyone) can use to structure your scans in an orderly way. It makes them easier to read and find things later. Everything below "Universe" is optional. For readability, after you write the scan, delete what you don't actually use. If your subscription allows, it can be easier to write a separate scan for each idea you have.

    // scan title

    // Include the name of your scan inside the scan itself.
    // If you like the results of the scan, copy it to Word or Notes or something as back up.

    // RATIONALE

    // what does the scan do and what's the reason for it (maybe cite the symbol and chart date showing the set up you want to capture)

    // BEGIN SCAN

    // UNIVERSE

    // what kind of symbols do you want to search
    // you can select and edit from the "Ticker Properties" drop down in the Scan Components section

    // *** some possible ticker properties and sample code ***
    // customize to your requirements, or delete if not needed

    // * type *
    [type is stock]

    // * symbol *
    // [and symbol not contains '/']

    // * name *
    // and [name not contains 'Fund']


    // * exchange *
    and [[exchange is NYSE] or [exchange is NASD]]

    // * market cap *
    and [market cap > 100]

    // * optionable *
    //and [optionable is true]

    // *** you can also select from symbol characteristics Price/Volume/SCTRS drop down ***

    // * price *
    // and [close > 1]

    // * volume *
    // and [sma(63, volume) > 100000]

    // * SCTR *
    // and [SCTR > 50]

    // *** include or exclude membership in indexes or ETFs using drop down ****

    // *** indexes and ETFs ***
    //and [group is sp500]
    //and [group is not ETF]

    // *** include or exclude memebership in sectors and industries ***

    // you can use the drop downs, or just copy the code below and add/remove "//" as needed


    // include all sectors in scan
    // [
    // [group is EnergySector]
    // or [group is MaterialsSector]
    // or [group is IndustrialSector]
    // or [group is CyclicalsSector]
    // or [group is ConsumerStaplesSector]
    // or [group is HealthCareSector]
    // or [group is FinancialSector]
    // or [group is RealEstateSector]
    // or [group is TechnologySector]
    // or [group is CommunicationServicesSector]
    // or [group is UtilitiesSector]

    // ]

    // selected sectors - uncomment (remove "//") sectors you want to scan
    // and [group is EnergySector]
    // and [group is MaterialsSector]
    // and [group is IndustrialSector]
    // and [group is CyclicalsSector]
    // and [group is ConsumerStaplesSector]
    // and [group is HealthCareSector]
    // and [group is FinancialSector]
    // and [group is RealEstateSector]
    // and [group is TechnologySector]
    // and [group is CommunicationServicesSector]
    // and [group is UtilitiesSector]


    // CONTEXT

    // for Context and Set Up, pull indicators from drop downs and edit:
    // - Technical Indicators, Candlestick Patterns, Candlestick Building Blocks, P&F Patterns

    // context means longer term chart states, like MAs rising or falling, indicators above or below 0, etc

    // SET UP

    // set up means a short term changes that could mean a trade is near;
    // for example, price crosses channel or indicator line crosses signal, etc.

    // ORDER RESULTS

    // many possibilities, but only one per scan run

    // rank by sector
    // rank by industry
    // rank by market cap
    // rank by ROC(63)
    // rank by ROC(21)
    // rank by ROC(10)
    // etc.


    // END SCAN
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