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2003issue C121-2

A reconstruction critique of point-and-figure daytrading

Readers who rebuilt a published point-and-figure daytrading setup on the e-mini found a high session-trade-count, estimated cost drag that would have absorbed the trend runs, and a conflict between a one-box-reaction and a three-box-reversal. The editor later said the trade-result display was meant only to illustrate charting.

  • A reconstruction with a 0.33 box-size and a reversal rule produced a session-trade-count above 70 on one e-mini session and above 60 on the prior session.
  • Those two sessions clustered near breakeven before costs, and estimated brokerage costs near 377 would have absorbed the two strong trend runs.
  • A three-box-reversal prints all three boxes at once when the reversal level is reached, which conflicts with a one-box-reaction that treats a single box of adverse movement as the exit.
  • The published trade-result display was later called misleading and was meant only to illustrate point-and-figure charting, not a sellable system.
Entries in this reading1 entry
Current trackPoint and figure chart37 readings

Treat the published chart as a hypothesis

Point-and-figure records price only in fixed boxes and starts a new column after a set reversal. Once box-size and reversal-count are fixed, that scale choice becomes a buy or sell hypothesis rather than a picture of every tick.

Editorial reading: a published daytrading example should be treated as that hypothesis. Rebuild the same box-size and reversal-count on the same contract, then test whether session-trade-count, cost drag, and column-print mechanics still leave a signal that could have been taken in real time.

Session-trade-count and cost drag

A reader rebuilt a point-and-figure daytrading setup with a 0.33 box-size and a reversal rule. The reconstruction counted more than 70 trades on one e-mini session. The same reconstruction produced more than 60 trades on the immediately prior session.

That session-trade-count is the first fact the published chart has to survive. A 0.33 box-size is sensitive to small moves, so the chart adds boxes often and completes columns often.

The same critique said the two sessions clustered near breakeven before costs. The reader estimated brokerage costs near 377 even with strong execution and a low-commission self-directed account. On that reconstruction, commissions would have absorbed the two strong trend runs.

One-box-reaction against a three-box-reversal

A second letter said a 0.33 e-mini box was presented as limiting risk to one point if only a one-box-reaction was allowed. Under that rule, a single box of adverse movement is enough to close the position.

The same letter argued that a three-box-reversal does not work that way. The opposite column appears only after three boxes of counter-move, and those three boxes print together once the threshold is hit. The chart therefore does not pause after the first adverse box.

Editorial reading: that print order also raises fill-realism. In a fast contract, marking the reversal at the exact box that first completed the pattern is not the same as getting that price. The three boxes arrive as one print, so the one-box-reaction cannot be executed as drawn.

What the example was meant to show

Readers flagged an undated example that showed the e-mini near 1144. They asked whether the session was representative or constructed for the article.

The editor later called the published trade-result display misleading and said it was meant only to illustrate point-and-figure charting, not to present a sellable system.

Editorial reading: after that clarification, the chart still shows how box-size and reversal-count turn a repeatable condition into a hypothesis. It does not show that the daytrading scale survived reconstruction.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
20 of 30 in the Point and figure chart track
20041-3 pp.Next on Point and figure chartPoint-and-figure column moving-average crossoversPoint-and-figure columns have no linear calendar axis, so a conventional time-period simple moving average does not correspond to the sequence of X and O columns.
All readings on this track · 30 readings
  1. 1988Constructing trend definitions with filters and lines
  2. 1989Reversal count as the clock on point-and-figure charts
  3. 1989Point-and-figure setup and session-average entry windows
  4. 1989Two-scale point-and-figure trendlines and stop placement
  5. 1989Adjusted net asset value, tighter reversals, and written stops on a fund point-and-figure chart
  6. 1990Stack option odds after point-and-figure signals
  7. 1991Constructing a point-and-figure downtrend-break
  8. 1991Constructing point-and-figure box and reversal charts
  9. 1991Constructing a close-tested one-two ladder on a point-and-figure chart
  10. 1992Point-and-figure, breadth, and volume as falsifiable hypotheses
  11. 1992Three-gate stock selection with ranks and point and figure
  12. 1993Constructing combined stochastics and point-and-figure relative strength
  13. 1997Point-and-figure box scale and reversal construction
  14. 2000Cotton weekly point-and-figure: late-stage decline, named weekly close
  15. 2000Constructing point-and-figure charts for support, resistance, and breakouts
  16. 2001Swiss franc: seasonal permission and a weekly point-and-figure breakout
  17. 2001Constructing point-and-figure boxes and reversals
  18. 2002Point-and-figure construction: box, live column, and three-box reversal
  19. 2003E-mini point-and-figure box-size and a descending-triangle breakout
  20. 2003A reconstruction critique of point-and-figure daytrading
  21. 2004Point-and-figure column moving-average crossovers
  22. 2005Box-series transforms for trend and channel work
  23. 2006Constructing bearish point-and-figure support breaks
  24. 2008Point-and-figure forex breakouts and triangles
  25. 2012From tactile charts to written trade rules
  26. 2013Combine a Point and figure chart and Moving-average crossover inside one System optimization procedure
  27. 2015Point-and-figure time and volume limits are conventions to test
  28. 2016Measurement-first critique of indicator defaults
  29. 2017Point-and-figure construction, reversals, and column-based overlays
  30. 2019A 2019 charting case as a three-check trend classroom
By fieldChart patterns222 readingsBy year2003104 readings
All 37 readings tagged Point and figure chart
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