Ask Colin

Which trading situations or styles lend themselves better to point and figure charts and does one need to track volume separately when using them?

It is my experience that chart form is not specific to any particular trading situation or trading style. I use Point and Figure, bar charts and candlestick charts in combination. All reveal different insights into price action.

The volume question is an interesting one. It can be argued persuasively that volume is reflected in a P&F chart in that the more volume, the more price changes occur and therefore the more plots on the chart. However, this is not true where daily summary data is used. It can only be true really where true course of sales or tick data is used. For my own part, I am far from totally convinced. I prefer to see things directly, rather than through a filter. While the filtering involved in selection of box size aids analysis in the P&F method, it is nowhere near as precise for volume. I prefer the traditional volume histogram under the bars or candles and the powerful On-Balance- Volume line.