Point & Figure Counting Simplified: Predicting Price Targets Like Wyckoff

Want to know where price is headed? Point & Figure counting gives you objective price targets based on the size of accumulation or distribution. It's like measuring the fuel in the tank before the move.

What Is Point & Figure Counting?

Imagine you're measuring how far a rubber band will snap back after you stretch it. The more you stretch it, the farther it will fly back when released.

Point & Figure counting works the same way. It measures how much "energy" smart money has built up during accumulation or distribution phases, then calculates how far price is likely to move when that energy is released.

Why Point & Figure Matters

Most traders guess at their profit targets. They might say "I'll take profits at the next resistance level" without any scientific basis. Point & Figure counting gives you:

• Realistic targets: Based on the actual "fuel" built up in the range
• Multiple target levels: Conservative, moderate, and aggressive targets
• Trade management: Know when to take profits and when to hold
• Risk assessment: Measure if the reward justifies the risk

The Simplified Counting Method

Traditional Point & Figure can be complex. Here's the simplified version that works for modern trading:

Step 1: Identify the Base

The "base" is your accumulation or distribution range. Measure:

• Width: Distance from support to resistance
• Time: How long price stayed in the range
• Activity: Number of times price tested the levels

Step 2: Apply the Basic Count

Use this simplified formula:

Step 3: Calculate Your Targets

Advanced Counting Factors

Adjust your count based on these factors:

Time Factor

• Quick ranges (1-2 weeks): Use 1.0x multiplier
• Normal ranges (3-6 weeks): Use 1.5x multiplier
• Extended ranges (7+ weeks): Use 2.0x or higher

Activity Factor

• Few tests (3-5): Standard multipliers
• Moderate tests (6-8): Add 0.2x to multipliers
• Many tests (9+): Add 0.5x to multipliers

Volume Factor

• Low volume range: Reduce targets by 25%
• Normal volume range: Use standard targets
• High volume range: Increase targets by 25%

Practical Trading Applications

Profit Taking Strategy

1. 25% at Conservative target: Lock in guaranteed profits
2. 50% at Moderate target: Take the majority of profits
3. 25% at Aggressive target: Let runners capture extended moves

Stop Loss Positioning

Your stop loss should be:

• Accumulation trades: Below the spring low
• Distribution trades: Above the upthrust high
• Risk-reward check: Ensure conservative target gives minimum 2:1 ratio

Common Counting Scenarios

Integration with Modern Tools

Combining with CRT

• Use P&F targets as: Final destinations for CRT trades
• CRT levels become: Profit-taking zones on the way to P&F targets
• Order blocks at P&F targets: Often provide excellent reversal points

Modern Timeframes

Adapt P&F counting to modern trading:

• Daily charts: For swing trading (multi-day holds)
• 4-hour charts: For day trading extensions
• 1-hour charts: For intraday scalping targets

Validation Techniques

Check Against Fibonacci

Your P&F targets should align reasonably with Fibonacci extensions:

• Conservative: Often near 127% extension
• Moderate: Often near 162% extension
• Aggressive: Often near 200% or 262% extension

Historical Analysis

Look at past similar ranges on the same instrument:

• Similar width ranges: How far did they typically move?
• Similar duration: What multipliers worked historically?
• Market conditions: Trending vs. ranging markets

Common Mistakes to Avoid