Inc. The point and figure chart, which is built on a filtering technique, is an old favorite. The idea is good, but this type of chart has several drawbacks. First, the chart makes the error of using points and not percentages.
Points are a poor measure of importance in a stock chart.
A straight trendline on an arithmetic scale actually has a decreasing rate of incline as you travel up the line. Another limitation of the point and figure chart is it ignores the aspect of time. You can eliminate these limitations with three simple steps. First, set up your filter as a percentage, not in points. Ignore any reversals of less than your specified percent.