Disliked1. If I take the entry as soon as it breaks from the pattern, then the stop should be put under the nearest low or over the nearest high right? Then isn't it too wide and in case that it actually goes wrong I risk loosing 20 pips or more?Ignored
I would prefer to put the SL 1 box above the last high, this is safer. But even in your example the SL was not hit. The stop would be set to 1.2080, but the market did not reach 1.2080 again. If it did, there would be another box above the last column before the sharp dropdown.
If 1.2080 was hit, the box from 1.2080 to 1.2090 would have been drawn. If 1.2089 would be reached, nothing would happen. Only if 1.2090 would be reached, a new box from 1.2090 to 1.2100 would be drawn.
Disliked2. What qualifies a good entry? I.e. pnf-trader in your chart I have marked 2 entries that I would have taken and they would have gone wrong. Today it seems that I get only false alarms like these.Ignored
In trade 1, you would enter the trade 1 box below the break of the blue support line - a double bottom. It's not clear in the screenshot with the arrow, where you would enter it - it seems as if the entry should be 2 boxes higher than where you put it.
Attached, I have made a screenshot of my prefered entry and how I let the market decide for me, when it's time to get out of a trade. I am using 2 EMA, 3 and 8, 5 and 13 or 3 and 21... it depends on the market and setup.
This 2 EMA act as filter, not as signals alone. If the EMAs cross, I take the first signal and enter the trade. If fast EMA is below slow EMA, I only take the first sell signal and vice versa.
Disliked3. Somewhere else I have read that when we have e.g. a breakout it is better to wait for the O's and enter at the top of the last O and put the stop one box below that. This sound's fine until I realized that a column of Os means that the price jumps up and down and there is no way to know if that is the last O in the column. I have been bitten bad by that today several times.Ignored
It shouldn't be above the last high (in a sell signal), because then, this would be a new signal - a buy signal in this case. So your stop loss always remains above the last high and you wait for a reversal. You will seldom get the best price and sell the top - but if you wait for the reversal, you will at least get a better price. Your SL is nearer and with the same risk, you can trade larger position.
This works fine in many cases. But what, if there ain't no reverals and the markets falls directly after the forming of the sell signal? Then you would have missed the trade or enter it at a worse price.
So, yes... what you read, works. Often in higher setups like 100x3, this is a good strategy. But in fast markets and daytrading setups, you maybe would miss a good trade. It's a tradeoff and you have to find out for yourself and the setup and markets you are trading, wether this is something you want to follow or simply take the signal "as is".
You can use Point & Figure like any regular chart and also trade support and resistance channels, buy/sell when price touches a resistance or support trendline. Maybe you know the 1-2-3 setup? In Germany it's called the market technique (Markttechnik). This can also be applied to P&F. You count the 1-2-3 high and lows and enter between 2 and 3, speculating that the prices will keep going in the direction of the trend.
Attached are also 2 screenshots that show this methods.
Attached Image(s) (click to enlarge)
