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2008issue C091-3

Evaluating point-and-figure column breaks with time stops

Point-and-figure drops the calendar, so a column break is only a written entry hypothesis. The archive makes that hypothesis auditable by adding a time stop, a 13-week trend filter, and a passive hold over the same clock.

  • A point-and-figure signal is a new X or O column that exceeds a prior column extreme, because the chart records only box-sized price changes and omits calendar time.
  • Double-top and triple-top buys, and double-bottom and triple-bottom sells, were applied as four discrete column-break entry rules, not as complete trade plans.
  • A next-session entry plus a time stop lets the same clock be compared with a passive cash-index hold, while a 13-week trend filter allows longs only above the average and shorts only below it.
  • Adding the trend filter did not materially change the relative standing of the four patterns, and the evaluation treats a bare column break as incomplete on its own.
Entries in this reading3 entries
Current trackTime stop24 readingsPoint and figure chart56 readingsTrend filter184 readings

What the chart actually records

Point-and-figure is a price-only chart that plots rising boxes as X columns and falling boxes as O columns and omits calendar time. Construction records only box-sized price changes, so a signal is a new X or O column that exceeds a prior column extreme.

That event is a column-break. It is used as a discrete entry rule, not as a later chart event that also closes the trade.

Four column-break rules

A double-top buy requires a rising X column to clear the high of the previous X column. A triple-top buy requires a rising X column to clear the highest of the two preceding X columns.

A double-bottom sell requires a falling O column to print one box below the prior O-column low. A triple-bottom sell requires a falling O column to undercut the lows of the two preceding O columns.

Two ways the archive closed the trade

The historical audit applied those four column-break rules to every S&P 500 constituent from the start of the sample, or first listing, through the end of the sample.

One exit design counted a win only if price first moved a fixed distance in the signal direction and a loss if the opposite move printed first. Each pattern produced a large number of such trades.

A second design entered on the next session open and used a time stop: a forced exit after a fixed number of sessions rather than after a later chart event. The cash index path over the same holds served as a passive baseline.

The sample included a large index decline inside a mostly rising market. The write-up flags that mix as a possible bullish bias against sell signals.

The 13-week trend filter

A 13-week simple average served as a trend filter. Long column-breaks were taken only above it and short column-breaks only below it.

Adding that trend filter did not materially change the relative standing of the four patterns versus the time-stop-only design.

How the evaluation uses the pattern

The evaluation treats a simple column break as incomplete on its own and as better used for trend context beside a separate entry rule.

Editorial reading: write the column-break as a falsifiable chart condition, then keep the exit and the higher-horizon filter as separate, testable pieces.

Average P&F trade return after a 5-, 20- or 60-day time stop

A trader should see that stretching the time stop helps only the triple-top break: it is the sole pattern that outruns a passive S&P 500 hold by 60 days, while double and triple bottoms lose more the longer they sit. The bars are the average-trade percentages printed in the article’s all-signal time-exit table (Figure 3) for S&P 500 stocks from 1990 through 2006.
A trader should see that stretching the time stop helps only the triple-top break: it is the sole pattern that outruns a passive S&P 500 hold by 60 days, while double and triple bottoms lose more the longer they sit. The bars are the average-trade percentages printed in the article’s all-signal time-exit table (Figure 3) for S&P 500 stocks from 1990 through 2006.S&P 500 stocks · January 1990 through December 2006 · 1990-01-01T00:00:00.000Z to 2006-12-31T00:00:00.000Z

Entry is the next day’s open after the column break. The 1990–2006 window includes the 2000–02 bear market but was net bullish, a bias the author says may explain the weak sell-signal results. A separate 13-week moving-average filter left the ranking unchanged.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
10 of 15 in the Time stop track
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All readings on this track · 15 readings
  1. 1989Preflight checklist, time-stops, and stand-aside rules
  2. 1991Parameter windows for averages, option overlays and time stops
  3. 1995Three setup gates and a session-count clock complete a long bottom
  4. 1995Evaluating index futures OHLC reversals with RSI and time stops
  5. 1995A weekly two-close breakout and an eight-week time stop
  6. 2000Constructing breakout entry rules and time stops
  7. 2004Constructing action-reaction swing targets and time stops
  8. 2005Constructing breakout entries with trailing and time stops
  9. 2006Evaluating a restrictive range entry with a timed exit
  10. 2008Evaluating point-and-figure column breaks with time stops
  11. 2011Intraday gold swing with a daily entry limit, a time-stop, and a fixed stop-loss
  12. 2012Last-hour entries with a book-level loss bound and a next-open time stop
  13. 2015Precommit stop-loss, trailing-stop, and time-stop rules before entry
  14. 2018Auditing rank-rotation tests for time-stop and slot rules
  15. 2019Confirmation-first pyramiding with price and time stops
By fieldChart patterns312 readingsBy year2008150 readings
All 24 readings tagged Time stop
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