Point & Figure Charting: The Essential Application for Forecasting and Tracking Market Prices (Wiley Trading) (Hardcover)

by Thomas J. Dorsey (Author)
Key Phrases: bullish percent, bullish support line, catapult formation, Dow Jones, Wall Street, Double Bottom (more...)

Editorial Reviews

Product Description
"Everyone who's involved in financial markets must understand Point and Figure charting in order to get the full picture, whatever your view of technical analysis". - Jim Rogers, author of Hot Commodities and Investment Biker

"An invaluable road map for managing risk in the markets. Tom's methodology has given us the discipline and confidence to look around corners for our clients for almost twenty years." - James A. Parish, President and COO, Morgan Keegan & Co., Private Client Group

"Tom Dorsey continues to be one of the foremost authorities on Point and Figure charting. His relative strength analyses are essential for investors and traders alike. Furthermore, I always want to know what his NYSE Bullish Percent Indicators is "saying." - Lawrence G. McMillan, President, McMillan Analysis Corp., www.optionstrategist.com

"Tom Dorsey has done it again... he has taken his 30-plus years of unending devotion, talents, and insights in technical analysis and applied them to Exchange Traded Funds. He begins with the history of ETFs, explains how different they are from mutual funds, and then applies his expertise in Point and Figure charting to help traders and investors time their purchases and sales." - Ralph J. Acampora, CMT, Director of Technical research, Knight Capital

"Reading Tom Dorsey's Point & Figure Charting is the like procuring a road map before you begin a journey. It's a comprehensive look at how to succeed in the markets. This book is not only essential but easy to follow for everyone." - Paulo Pinto, CEO, Dif Broker

"Point and Figure Charting has become a valuable part of my daily trading routine. As an investment professional, it makes perfect sense to use Tom's methods in conjunction with fundamental analysis." - Damion Carufe, Investment Professional

From the Inside Flap
Today's investment industry is filled with a variety of new strategies that can be used to evaluate market price movements, but many of these methods never seem to deliver on what they promise. There is one approach to investment analysis, however, that has proven itself in all types of markets, and it's called Point and Figure Charting.

In the Third Edition of Point and Figure Charting, the world's top Point and Figure charting expert, Tom Dorsey returns to explain how traders and investors alike can use this classic technique-borne out of the irrefutable laws of supply and demand-to identify and capitalize on market trends. Within these pages, Dorsey describes, step-by-step, how to create, maintain, and interpret your own Point and Figure charts with regard to markets, sectors, and individual securities. He then explains how to use these findings to track and forecast market prices and develop an overall investment strategy.

Divided into three comprehensive parts, Point and Figure Charting, Third Edition Skillfully highlights many of the new developments in this field, including:

• How to use Point and Figure charting with exchange-traded funds (ETFs), commodities, mutual funds, and international securities
• How different relative Strength (RS) applications can provide you with great insights into where best to allocate investment dollars
• How the Bullish Percent concept that is applied to the NYSE and OTC can be applied to sectors within the market
• How to construct and manage a portfolio using the Point and Figure method, coupled with solid fundamental analysis.

This book also comes with a companion CD study guide. The CD contains tests and exercises that will not only solidify your understanding of the concepts presented, but also help you apply Point and Figure charting techniques to real world trading situations.

If you're looking for an investment approach that has stood the test of time-during both bull and bear markets-and is easy enough to learn, whether you're eighteen or eighty, then Point and Figure Charting, Third Edition is the book for you. Filled with in-depth insights and expert advice, this practical guide will help you grow your assets in any market.

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Product Details

• Hardcover: 400 pages
• Publisher: Wiley; 3 edition (March 30, 2007)
• Language: English
• ISBN-10: 0470043512
• ISBN-13: 978-0470043516
• Product Dimensions: 9.3 x 6.2 x 1.4 inches
• Shipping Weight: 1.4 pounds (View shipping rates and policies)
• Average Customer Review: 4.8 out of 5 stars See all reviews (9 customer reviews)
• Amazon.com Sales Rank: #11,543 in Books (See Bestsellers in Books)

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Customer Reviews

Most Helpful Customer Reviews

15 of 19 people found the following review helpful:

5.0 out of 5 stars Great resource for anyone sick of pie chart investing..., May 24, 2007

By	D. Joe (Scottsdale, AZ United States) - See all my reviews (REAL NAME)

I have been studied Tom's material on the Dorsey Wright website for several years now. And this book is a cumulation of many of the great ideas he talks about in his podcasts and daily notes section. As much as some people like to think technical analysis is the holy grail to riches, it is not. The main goal is risk management and not to hold on to the big losers in your portfolio that will destroy your investment return. How many investors have suffered since 2000 by having a majority of their portfolio in Large Cap Growth, and are now just getting back to even? Point and Figure doesn't call the top or the bottom, but it will alert you to when the trend changes. Tom's book goes over many of these techniques. Well done.

7 of 8 people found the following review helpful:

5.0 out of 5 stars "The trend is your friend!", May 2, 2008

By	Steven Phillips (Ada, OK United States) - See all my reviews (REAL NAME)

While it is difficult to consistently predict future price movements, it is much easier and more profitable to trade in the direction of the primary trend. Point and figure (P&F) charts help one define and identify those trends relevant to one's trading horizon. What makes this charting method so useful is that its simplification of price reporting makes current market status readily obvious. Whether the market is trending or in a congestion is seldom in doubt.

The simplicity of the P&F method bolsters its robustness in an effective trading program. Not only do price charts readily summarize market status, but other P&F techniques assist in reducing uncertainty. For example, it is possible to derive the likely extent of price movements from horizontal and vertical counts of congestion widths and depths; a bullish percent indicator is absolutely indispensible to successful trading; also, relative strength charting of individual sectors or issues compared to market averages helps answer both investment questions, "what," and "when." P&F analysis is useful in trading any vehicle from securities to futures. This was the first charting method used in the US and its use probably dates back to 1885, as per "Kline's 123 Tread Register."

Dorsey's book is a complete exposition of the P&F method. Based upon the prior writings of Ernest Staby, Abe Cohen, and Earl Blumenthal, the method is based upon a "reversal" formula using data readily accessible, as compared to the traditional "point" method of Wyckoff, deVilliers, and Taylor, which required access to tick-by-tick data. This book is well written; the material is presented clearly with many examples; and the method is very helpful in clearing the noise from market analysis.

Free P&F charts are available from stockcharts.com. In particular, I prefer percentage charts which eliminate the "box size" problem and facilitate intermarket comparisons. These percentage P&F charts require an adjustment in calculating horizontal and vertical counts, as follows. In, say, a 2.5%-2 box reversal chart of WTIC, a horizontal count on a congestion stretching from Sep06 through Jul07 has a width of 18 boxes. Multiply this width (18) by the number of boxes in a reversal (2) and this becomes the exponent in the following formula: ((1+percent)^Exponent)*Low price in congestion = Target high price. (For a target low, divide the high price of the congestion by the percent to exponent.) [For WTIC: ((1+.025)^(18*2))*51.34 = 124.89 to 128.01 (bottom of range, 124.89 [calc] * 1.025 = top of range 128.01.] For vertical counts, count unbroken movement from high or low of congestion, multiply by reversal boxes, and use this as exponent for the box range percent. Multiply or divide the high/low price of the congestion be the exponented percentage.

I feel that acquiring familiarity with the P&F method will substantially increase one's ability to successfully identify and exploit market opportunities as they mature. Dorsey's work is a great place to start!

3 of 3 people found the following review helpful:

5.0 out of 5 stars A very sensible approach to investing, September 7, 2008

By	James P. Jones (Florida) - See all my reviews

The value of this book is much more than learning the technique of Point and Figure charting, although it will certainly do that. Dorsey spends considerable time in explaining his investment strategy, which depends highly on bullish percentage and P&F relative strength charts. His goal is to put the odds in your favor before making a trade based on a clear assessment of the supply/demand situation in the markets. As Jim Cranmer on CNBC says, "There is always a bull market somewhere" and P&F relative strength charts will tell you where it is. If you need to be defensive in your investing, the P&F charts will alert you to do that. This book comes with an instructive CD on the P&F charting and understanding relative strength concepts. A very sensible approach to investing.