PTMC team 06.04 2016

Technical analysis of “Point & Figure” charts

In the current article, we will continue to learn the basic trading strategies using "Point & Figure" chart. Earlier, we have told about the history of these charts, have shown how to set up them in our platform. Now, let’s move to the practice!

Ascending and descending trend lines

One of the most basic and important elements when analyzing "Point & Figure" charts are the trend lines. As with ordinary charts, the uptrend lines limit the quotes from below, and the downtrend lines limit the quotes from above. To build the uptrend line at least two lows are needed – pivot points.

It is also necessary that all the quotes were above the uptrend line, as on the picture below. Here we can see that there was a breakthrough of the uptrend line, and downtrend appeared:

"Point & Figure" chart, EUR/USD, P&F 13*3 1m

Trading tactic by the trend lines is the same as when trading on ordinary charts – if the price breaks the downtrend line, then go long. If the price breaks the uptrend line, then go short. In the books and articles dedicated to "Point & Figure" charts is often written that the trend lines on these charts are strictly at an angle of 45 degrees for an upward trend, and 135 degrees for a downward trend.

This is true, if the elements of the "Point & Figure" charts have the same width and height. When plotting the "Point & Figure" chart in the PTMC platform, the chart elements are usually stretched in height, and the trend lines will be held at other angles.

One more example of the trend line breakthrough:

"Point & Figure" chart GBP/USD, P&F 9*3 1m

Support and resistance levels

Let’s remind, that level in the graphical analysis is called a horizontal line, from which the price bounced at least once. Levels help us to predict the behavior of prices in the future – we assume that the price behavior will be changed near the level. If we assume that the price will bounce from the level, we open a position, placing Stop loss order above (below) the level. If the price "bounces" from the level, we’ll get a profit. If the level breakthrough occurs, Stop loss order will trigger. The example of plotting these levels and price behavior near them we can see on the picture:

"Point & Figure" chart, EUR/USD, P&F 9*3 1m, "Candle" style

USD/JPY chart, P&F 10*3 1m

Price objectives

Take profit levels when using "Point & Figure" charts are defined with two methods called "vertical" counting and "horizontal" counting. When "vertical" counting for a long position is used, it is necessary to count the number of "figures" in the first column, which broke through the previous consolidation, and on which the signal to buy occurred. Then, this number must be multiplied by three. Next, the obtained number of "figures" must be marked off from the lowest point, at which the upward trend begins. Therefore, we’ll get the price to set up the Take profit order. For downward trend we do vice versa, mark off the triple number of "points" in the first impulse, after the reversal down. "Horizontal" counting differs from "vertical", so that we do the same calculations based on the width of the horizontal consolidation. For example, if width of the consolidation is five "points" and "figures", the price can go from a base of fifteen points.

"Vertical" counting – objective on the chart CHF/JPY, P&F – 10*3 1m

"Horizontal" counting – objective on the chart AUD/CAD, P&F – 10*3 1m

Figures of technical analysis on the "Point & Figure" charts

Owing to the ability of "Point & Figure" "compress" the price chart, we can see more clearly not only the levels of support and resistance, but also figures of technical analysis.

"Double top" and "Double bottom"

These models portend a reversal of downward trend and upward trend, respectively.

"Double top" – signal to sell on the chart GBP/JPY, P&F – 10*3 1m

Signal to sell occurs after a breakthrough of support level.

"Double bottom" – signal to buy on the chart GBP/CAD, P&F – 10*3 1m

Signal to buy occurs after a breakthrough of resistance level.

"Triple top" and "Triple bottom"

These two signals are similar to the previous ones, but contain one column more – three times the price rises or falls to the same level before break it through.

"Triple bottom" – signal to buy on the chart EUR/CAD P&F – 15*3 1m

Signal to buy occurs after a breakthrough of resistance level.

"Triangles"

Occurrence of the triangular formation on the charts suggests that supply and demand are balanced. However, over time, supply or demand will outweigh, and the price will come out of a triangle, herewith a new trend will be formed. Under the rules of "Point & Figure" chart, a triangle must contain at least five columns. The first four columns form the figure, while the fifth is a breakdown. Herewith, each subsequent X-column must be lower than previous (each 0-column must be higher than previous). In the case of the triangle appearance on the chart, is better to wait for the moment, when price breaks through the line of support or resistance, comes out of the triangle and confidently moves in one direction.

"Triangle" as a reversal figure on the chart CAD/CHF P&F – 15*3 1m

Signal to sell occurs after price breaks through the support level.

"Bullish catapult" and "bearish catapult"

These formations are formed in the case, when the price breaks level of resistance or support, formed by multiple tops or bottoms. After a breakthrough, the price forms a correctional column, which however does not reach the previous highs or lows. Impulsive movement in the direction of the basic breakdown finishes the “catapult”:

"Bearish catapult" – AUD/CHF, P&F – 15*3 1m

These formations are only used on the "Point & Figure" charts.

In addition to these, there are other formations on the "Point & Figure" charts – such as, "Shakeout", "Long tail down", "High pole" and variations of formations, which have already been described in this article. If you are interested in trading with "Point & Figure" charts, you can obtain detailed information if you refer to the source – the book of Thomas Dorsey.

Placing Stop Loss orders

Usage of the "Point & Figure" charts in the PTMC platform allows traders to define effectively the direction of the main trend, build trend lines, and find graphical figures. One more advantage of "Point & Figure" charts is the ability to open positions, place Stop loss and Take profit orders on clearer price levels. Orders can be placed under the nearest column of "points" from the entry point when opening a long position, and above the nearest column of "figures" when opening a short position. Herewith, Stop orders are usually small, that minimizes the loss when prediction is failed, and changes in price are unfavorable for us. Stop orders can be adjusted when the price moves in the profitable direction – move them after the price under the new columns of "points" in the case of a long position, and above the new columns of "figures" in the case of a short position. Therefore, Stop loss that initially protected us from the losses, during the motion would protect the obtained profit.

Disadvantages of the "Point & Figure" charts

In my opinion, the "Point & Figure" charts are not suitable at all for the analysis using indicators. This is due to the fact, that long-term unidirectional price movements are displayed as a single column, which has one timestamp. Because of this, indicators using the averaging, will be greatly delayed as compared with the same indicators, built on ordinary time-based charts. Therefore, if you use the indicators in your trading system, then build them on ordinary charts with a linear time scale.

Conclusion

The "Point & Figure" charts in the PTMC platform, in spite of their more than a century history, are a convenient tool and a good alternative to the candlestick and bar charts, when holding the graphical analysis.

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Referral Program Agreement

Referral Program Agreement (henceforth referred to as “the Agreement”, “Referral Agreement”) is made between PTMC (henceforth referred to as “the Company”) and Referral Partner (henceforth referred to as “Referral Partner” or “the Partner”).
Terms and conditions of the present Agreement are binding for the Company and for the Referral Partner.

The Agreement contains all the terms and conditions that shall regulate relations between the Company and the Referral Partner.

The Agreement shall enter into effect as soon as the Referral Partner registers on the PTMC official website and shall remain valid until the termination of the Agreement.

Please note that the Company reserves the right to revise, modify, change or remove clauses of the Agreement at any time at its sole discretion. Please check periodically terms and conditions of this Agreement on the Company website.

The Company reserves the right to reject the registration of any entity or person in the PTMC Referral program including the case if such entity is a person suspected of fraudulent activities фе its sole discretion.

1. General Terms

1.1. The Company and the Referral Partner agree and accept the obligations under the Agreement.

1.2. The Referral Partner undertakes rights and obligations set forth hereinafter. The Referral Partner agrees to acquire users to the Company acting in his name.

1.3. The Referral Partner acknowledges that all the users acquired to the Company are the Clients of the Company.

1.4. The Agreement is written in English language. The Company may provide the Сlient with the translation of the Agreement into the needed language on demand. English version of this Agreement is to be of prior importance. The translation may be provided only for the convenience of the Сlient.

1.5. To become an Referral Partner a user must:

1.5.1. Register on the Company website PROTRADER.ORG.

1.5.2. After the registration on the PTMC official website the Referral Partner receives an individual unique referral link which is available in user profile.

1.6. The Company has the right to request confirmation of any information provided by the Referral Partner during the registration.

1.6.1. When the information provided by the Referral Partner during the registration is changing, the Referral Partner should inform the Company about such modifications and request the Company to update the data.

1.7. After the Referral Partner accepts terms and conditions of the Agreement, he/she has the right to:

1.7.1. Conduct advertising campaigns in the interest of the Company.

1.7.2. Introduce marketing and advertising campaigns with the aim to acquire new Clients to the Company, provided that such events are legal in the country where they are conducted.

1.7.3. Provide the Clients with the necessary information about the Company, including the Company contact information, as well as general conditions of the services provided.

1.7.4. The Referral Partner has the right to use promotional materials provided by the Company representatives, they are: banners, text links, landing pages etc. The Referral Partner may use banners with the Company logo provided by PTMC and/or his personal referral link.

2. Rights and obligations of the Referral Partner

2.1. By registering on the official PTMC website the Referral Partner confirms that he/she accepts all the terms and conditions set out in the present Agreement. The Referral Partner acknowledges the fact that the Company has a right to modify the terms and conditions of the Agreement unilaterally.

2.2. The Referral Partner agrees to acquire new Clients to the Company under the present terms and conditions set by the Company.

2.3. The Referral Partner accepts terms and conditions regarding funds withdrawal and commissions charged that are specified in the Client Agreement.

2.4. It is prohibited to the Referral Partner to use any fraudulent methods, such as threatening, blackmailing etc. to attract new Clients to the Company.

2.5. The Referral Partner is obliged to get acquainted with the services provided by the Company on his own and inform the Clients he/she has acquired/is going to acquire about important changes in time.

2.6. The Referral Partner is obliged to warn the Client about the risks of currency trading on the foreign exchange market.

2.7. The Referral Partner is obliged to solve the problems the Client may face with while trading on the foreign exchange market. In case if the Referral Partner does not achieve to solve the above mentioned problems on his own, the Referral Partner is obliged to contact the Company and represent the necessary details.

2.8. The Referral Partner shall not give any recommendations or advice to the Client related to trading operations on the market. The Company shall not be responsible for the consequences of such recommendations and advice

2.9. The Referral Partner is not permitted to conduct trading operations on the account of the Client he has acquired.

2.10. It is prohibited to the Referral Partner to get referral revenue from his own accounts and those owned by his close relatives in case if the partner is an individual; as well as from private accounts of founders or accounts of their close relatives in case if the partner is a legal entity.

2.11. In case it is detected that the Referral Partner uses documents of the third parties with the aim to get referral revenue, the Company has the right to block all such accounts including personal account of this Referral Partner without any right of further renewal.

2.12. The Referral Partner shall not disclose the information received from the Company during the collaboration period and the data the containing in the Agreement to any third parties.

2.13. It is forbidden to the Referral Partner to use the following types of advertisement:

2.13.1. Advertisement on websites that contradict the laws of the country where the Referral Partner is located.

2.13.2. Advertisement on websites content of which is contrary to current legislation, morality, public order, good faith or is defamatory, aggressive, obscene, offensive, violent or incites violence, racist or xenophobic, or in general which is illegal or violates a person's rights and/or physical and/or moral integrity.

2.13.3. Spam mailing.

2.13.4. Advertisement with the false information contained.

2.13.5. Any other advertising that may affect credibility or reputation of the Company or any other dishonest marketing methods.

2.14. It is prohibited to the Referral Partner to organize monetary relations with the Clients (including receiving money, payment or banking cards, etc.).

2.15. The Referral Partner certifies and agrees that he shall act in accordance with all the applicable Anti-Money Laundering laws.

2.16. The Referral Partner is obliged to inform the Client of the need to protect security and confidentiality of account and login information and of the necessity not to disclose such information to any third parties. The Company shall not be responsible for the unauthorized use of the Client account information by any third parties.

2.17. The Referral Partner shall be responsible for the accuracy of the Client registration form and the authenticity of the data provided by the Client.

2.18. The Referral Partner allows the Company to use contact information provided during the registration, such as email address and other information specified in order to send the letters and proposals.

2.19. The Referral Partner agrees that the Company may unilaterally terminate and change terms and conditions of the Agreement without any explanations.

2.20. The Referral Partner is not entitled to: publish any negative comments (essays, letters) concerning the Company in any newspapers, magazines or other periodicals, blogs, Internet forums or other web-resources that may affect credibility or reputation of the Company. If the Referral Partner uses his own web-resource in order to attract clients to the Company, the content of the web-resource regarding the Company shall be approved by the Company.

2.21. If the Company detects that the Referral Partner has been involved in activities described in clause 2.20 of the Agreement, the Company is entitled to reject the Referral Partner request for funds withdrawal and to block his account, as well as inform the regulatory authorities of the jurisdiction of the Referral Partner.

2.22. It is prohibited to the Referral Partner to use PTMC brands in any way or manner whatsoever, including but not limited to the words “PTMC” spelled in any possible way (including with typos, spaces, signs, symbols or in any other way). Such forbidden use of the PTMC brands includes the use of such words/trademarks in the referral advertisements or in any part therewith, in the displayed URL and/or in the destination URL.

2.23. The Referral Partner shall only deal with third parties as a client of the Company. The Referral Partner shall not use the Company name, Company logo, etc. anywhere, including promotional materials, letterhead and business cards, advertisements and publications without the Company’s prior consent, with the exception of the case described in clause 1.8.4. of the Agreement.

2.24. The Referral Partner shall respect the confidentiality of the Company business and it is prohibited to him/her to disclose any confidential information or any information concerned the Company business for five years after termination or cancellation of the Agreement.

2.25. The Referral Partner guarantees the precise performance of the above mentioned obligations.

3. Rights and obligations of the acquired Clients

3.1. A user shall be considered as acquired by the Referral Partner after it is registered on the official PTMC website by following the unique link of the Referral Partner.

3.2. A client shall be considered as the acquired by the Referral Partner under the condition that the Client has not be previously registered as the client of the Company.

3.3. The Referral Partner shall not be entitled to refer his close relatives in case if the Referral Partner is an individual; or close relatives of the founders in case if the Referral Partner is a legal entity. The Referral Partner shall not be entitled to refer his own accounts.

3.4. Account owned by the Referral Partner and those owned by his close relatives if the partner is an individual, as well as private accounts of founders or accounts of their close relatives if the partner is a legal entity shall not be considered as those that the Referral Partner has acquired.

3.5. Accounts detected to be registered by the Referral Partner himself in order to get money through dishonest means shall not be considered as those that the Referral Partner has acquired. In case if such violation of the terms and conditions is detected the Company is entitled to terminate the Agreement and to block the Referral Partner account.

3.6. The Referral Partner himself, his relatives or any other affiliated parties shall not be considered as the Clients acquired by the Referral Partner. In case if any data of the Referral Partner coincides with the data provided by any acquired Client (such as ID data, address, telephone number, email address, IP address, etc.), such Client shall not be considered as the acquired one and shall be removed from the Referral Partner list. In such a case the referral revenue credited for this Client will not be paid.

3.7. Should the IP address of the Client be the same as that of the Referral Partner then they shall be considered affiliated and the referral revenue credited for this Client will not be paid.

4. Rights and obligations of the Company

4.1. In case if the Referral Partner fails to perform any obligations under the Agreement, the Company is entitled to terminate this Agreement.

4.2. The Company reserves the right to take legal actions against the Referral Partner in case the Referral Partner attempts to manipulate the Company and/or the Company proprietary trading platform and/or abuse the Referral Program. The Company reserves the right to withhold and/or deduct from any payment to the Referral Partner in the event of such manipulation and/or abuse.

4.3. The Company reserves the right under its sole discretion to reject the registration of any entity or person to the Referral Partner, including the case if such entity is involved in fraudulent activities.

4.4. If the Referral Partner appears to belong to one of the categories described in clause 4.3 the Company is entitled to terminate the Agreement and to block the Referral Partner account.

4.5. If any activity conducted by the Referral Partner is contrary to international law, morality, public order, good faith etc., the Company has a right to terminate the Agreement and to block the Referral Partner account.

4.6. The Company shall pay referral revenue to the Referral Partners after the Company receives payments for the software license paid by the acquired Clients.

4.7. The Company shall provide the software paid by the acquired user after the fact the payment has been carried out.

4.8. The Company shall enable Clients to conduct trading operations using PTMC software by providing them with logins and passwords to the trading terminal.

4.9. The Company maintains records of all trading operations made by the Clients.

4.10. In case if the Referral Partner fails to perform any obligations under the present Agreement, the Company has a right to exclude Clients from his list of the Clients acquired by him/her.

4.11. The Company is responsible for calculations of the referral revenue. In case if the Referral Partner wishes to check the calculations, the Referral Partner may request his Clients to provide the necessary statements. The Company shall not provide Referral Partners with the payment statements of the Clients.

4.12. The Company agrees to pay referral revenue to the Referral Partner in accordance with Appendix 1 of the present Agreement.

4.13. The Company determines method of the referral revenue calculation at its sole discretion.

4.14. In case if revenue is charged for the allegedly fraudulent accounts the Company reserves the right to cancel the revenues from such accounts and exclude such Referral Partners from the Referral Program.

4.15. Neither Party hereof shall be held liable for the complete or partial failure to fulfill its obligations in case if this failure results from Acts of God (including but not limited to fire, earthquake and other natural disasters, war or other military operations, blockades, government regulations and other extraordinary and unavoidable circumstances beyond either Party’s control).

4.16. Under the above mentioned circumstances the Party that fails to fulfill its obligations is obliged to inform the other Party through written notification within five business days from the moment of their onset and cessation.

Appendix 1. Referral revenue calculation

The Company shall pay the Referral Partner percentage in the amount from 10% up to 30% from the software license payments carried out by the Clients acquired by the Referral Partner.

The equivalent of the above mentioned referral revenue is calculated immediately as soon as the acquired client pays for the software and displayed in the user profile of the Client on the official PTMC website.

The Company shall pay the Referral Partner a certain percentage from 10% to 30% from the software license payments. This percentage is determined by the total number of the Clients acquired to the Company by the Referral Partner. The percentage is calculated according to the table attached below.

Crediting of the referral revenue shall be made on a monthly basis and shall be calculated within the first 10 days of each calendar month.

Any other payments are possible only in case if the Company and the Referral Partner agreed it in an amendment agreement.

Total number of the attracted users*	Referral revenue percentage
1 – 9 users	10,00%
10 – 99 users	20,00%
100 + users	30,00%