P&F charts ideal for detecting directional patterns and trends in a condensed format. How to draw The correct way to draw a point and figure chart is to plot every price change but practicality has rendered this difficult to do for a large quantity of stocks so many point and figure chartists use the summary prices at the end of each day. Some prefer to use the day’s closing price and some prefer to use the day’s high or low depending on the direction of the last column. The high/low method was invented by A.W. Cohen in his 1947 book, 'How to Use the Three-Point Reversal Method of Point & Figure Stock Market Timing' and has a large following. The charts are constructed by deciding on the value represented by each X and O. Any price change below this value is ignored so point and figure acts as a sieve to filter out the smaller price changes. The charts change column when the price changes direction by the value of a certain number of Xs or Os. Traditionally this was one and is called a 1 box reversal chart. More common is three, called a 3 box reversal chart. 45 degree trend lines Because point and figure charts are plotted on squared paper, 45 degree lines may be used to define up trends and down trends from important highs and lows on the chart allowing objective analysis of trends. Price targets Also in common usage are two methods of obtaining price targets from point and figure charts. The vertical method measures the length of the thrust off a high or low and projects the thrust to obtain a target. The horizontal method measures the width of a congestion pattern and uses that to obtain a target. Computerization In the US, Chartcraft used an IBM S/360 in the 1960s to produce point and figure charts. Point and figure charts were automated in the UK in the early 1980s by the Indexia company run by Jeremy Du Plessis. This automation increased the popularity and usage of point and figure charts because hundreds of charts could be viewed and altered quickly and easily. At the same time a method of log scaling point and figure charts was devised, where the value of the Xs and Os was set to a percentage rather than a price. This allowed the sensitivity of Point and Figure