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Steve - I was not suggesting that p&f techniques would not work, because
I believe they would. I was giving some of the pitfalls. I think p&f is
very hard for a beginner to grasp. One advantage of it, which I
neglected to mention, is that not many people use it these days.
The biggest problem is that I know of no system that really does a good
job building them long term. Apparently Ensign DOS has p&f, but unless
it builds the l-t charts from tick data, it cannot do it correctly 100%
of the time no matter what the box/reversal size (unless they are large
enough to encompass the largest intraday reversal ever). Many other
programs just guess the order prices occurred based on open, high, low
and close.
I was telling Mark that it depended on his demeanor and time frame and
whether or not he felt comfortable not having time (volume, open
interest) as well as price as part of his decision making process
(assuming he was using purely p&f). As for stocks versus commodities, I
do very little in the stock market anyway (outside of s&p futures),
though that is where many p&f techniques grew up.
Mark asked me for some resources on p&f techniques. Maybe you can help
him out too...
Steve Poser
Steve McGuire wrote:
>
> If we're talking about futures trading. I must disagree with SWP. The past 6
> months have been very successful for me using P&F and should end up with
> about a 30% return (60% annualized). The rules for trading futures with P&F
> sre different from those for stocks.
>
> swp wrote:
>
> > I do not use p&f to trade, and I rarely use it in my analysis, but as a
> > professional technical analyst I can give you some background on it.
> >
> > What p&f does very well is highlight price reversals and breakouts from
> > congestion. There are patterns in p&f that are similar to bar charts and
> > candles, but there are additional ones that are particular to these
> > charts. Though I believe some people use them even with small box sizes
> > and reversals, I have always felt that it works better for bigger
> > picture type stuff, since it can in essence summarize a large amount of
> > price movement in a small amount of space.
> >
> > One of the problems with p&f is that it is price only. There is no time
> > scale on the chart, so if a market range trades for a long time, you
> > might not update the chart at all, but might be missing a large amount
> > of congestion, which on a bar chart, or cumulative market profile chart,
> > would show up as a very important level, but would not mean too much on
> > the p&f.
> >
> > THE SINGLE BIGGEST PROBLEM WITH P&F IS THAT NONE OF THE COMPUTER
> > PROGRAMS (that I know of) BUILD THE CHARTS PROPERLY. You can only build
> > a p&f chart with tick data. Daily O/H/L/C will not work since the order
> > that the prices occurred is important. So, that means you need to build
> > them yourselves and have access to the full tick info or time and sales
> > data.
> >
> > If you have more questions, please feel free to contact me.
> >
> > Steve Poser
> > --
> > Steven W. Poser, President
> > Poser Global Market Strategies Inc.
> > http://www.poserglobal.com
> > Email: swp@xxxxxxxxxxxxxxx
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