Treggs
I use P&F charts periodically - they certainly can help to confirm whether or not the trend has changed, so I watch them for my "constant list" of stocks, indices and commodities.
BHP, for example, responds really well to a P&F chart if you tweak the box parameters (box size and reversal amount.)
Yes, a common practice is simply to go long on green (an ascending column of crosses or boxes) and short on red (a descending column of crosses or boxes.) A new column will start once the stock satisfies the criterion you set: i.e. size in points for each box and number of boxes for a reversal to occur. For BHP the conventional box size at the moment is about $1.22 and the reversal number is 3 - so a box is created for every $1.22 price movement. Get a price movement the equivalent in size to three boxes in the opposite direction to the trend and the column changes to reflect the reversal of trend.
Some P&F chartists look for trendlines, patterns etc in a P&F just as in conventional charts - that was what Volt was showing in his SPI200 P&F chart: a trendline and triangle.
I do not like to trade straight off a P&F chart but they can act a a good flag if you've missed a trend change. Like every indicator, pattern etc. you probably should look for a variety of confirmations before entering a trade rather than relying on just one.
That was a long-winded rant - excuse me but I got excited that someone else is interested in P&F charts in addition to Volt and me. There is pleny of good stuff on the net about P&F charting - just do a Google and weed out the obvious junk.
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