Box Size

AAA

DEFINITION of 'Box Size'

The minimum price change that must occur before the next mark is added to a point and figure chart. A point and figure chart's box size determines the value of price movements that will be recorded by each mark on the chart. Technical analysts use charts to view past and current price information for particular trading instruments, such as stocks or futures contracts. A traditional bar chart plots price changes at specific time intervals, such as a daily chart or a five-minute chart. Point and figure charting, on the other hand, adds a new mark only after price has moved a specified amount. This amount is known as the box size.

INVESTOPEDIA EXPLAINS 'Box Size'

Point and figure charts plot prices uses a series of Xs and Os, known as boxes. An X indicates that prices are rising, and an O shows that prices are dropping. Investors and traders must specify the box size in order to establish how much price must change before a new box is printed. If a 50-cent box size is specified, for example, then a new X or O (depending on the direction of price) will be printed each time price moves that amount. When prices are rising, Xs will be stacked on top of each other every time that price moves up 50 cents, forming a column. Once price drops 50 cents, a new column of Os will begin to the right of the previous X column. As long as prices drop, additional Os will be stacked under the first O to show each 50-cent fall in price. Charts with larger box sizes provide a less detailed view of the markets, while charts with smaller box sizes show a more detailed view.

RELATED TERMS
  1. Technical Analysis of Stocks and ...

    The academic study of historical chart patterns and trends of ...
  2. Point & Figure Chart

    A chart that plots day-to-day price movements without taking ...
  3. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  4. Pattern

    In technical analysis, the distinctive formation created by the ...
  5. Count

    A type of technical analysis that uses point and figure charts ...
  6. Reversal Amount

    The amount of price movement required to shift a chart to the ...
RELATED FAQS
  1. What assumptions are made when conducting a t-test?

    The common assumptions made when doing a t-test include those regarding the scale of measurement, random sampling, normality ... Read Full Answer >>
  2. How do futures contracts roll over?

    Traders roll over futures contracts to switch from the front month contract that is close to expiration to another contract ... Read Full Answer >>
  3. Why do companies enter into futures contracts?

    Different types of companies may enter into futures contracts for different purposes. The most common reason is to hedge ... Read Full Answer >>
  4. What does a futures contract cost?

    The value of a futures contract is derived from the cash value of the underlying asset. While a futures contract may have ... Read Full Answer >>
  5. How are double exponential moving averages applied in technical analysis?

    Double exponential moving averages (DEMAS) are commonly used in technical analysis like any other moving average indicator ... Read Full Answer >>
  6. How do you know where on the oscillator you should make a purchase or sale?

    Common oscillator readings to consider making a buy or sale are below 20 or above 80, respectively. More aggressive investors ... Read Full Answer >>
Related Articles
  1. Active Trading

    Point And Figure Charting Basics

    Learn how to construct and read these price charts designed to highlight entry and exit points for longer-term positions.
  2. Forex Education

    Tic-Tac-Toeing Your Way To Better Returns

    Point-and-figure charts eliminate the noise surrounding a stock to help you determine where it's headed.
  3. Investing Basics

    Understanding Total Return Swaps

    A total return swap is a contract in which a payer and receiver exchange the credit risk and market risk of an underlying asset.
  4. Fundamental Analysis

    Explaining Price Targets

    A price target is what an investment analyst projects a security’s future price to be.
  5. Fundamental Analysis

    Present Value Interest Factor of Annuity (PVIFA)

    PVIFA can be used to calculate the present value of a series of annuities by considering cash flows and depreciation.
  6. Investing Basics

    Explaining Absolute Return

    Absolute return refers to an asset’s total return over a set period of time. It’s usually applied to stocks, mutual funds or hedge funds.
  7. Economics

    Why The Dollar’s Strength Can Continue

    Overall, the U.S. dollar has rallied this year, with the Dollar Index (DXY) now up by roughly 8 percent year-to-date, but the gain hasn’t been steady.
  8. Chart Advisor

    ChartAdvisor for July 30 2015

    Weekly technical summary of the major U.S. indexes.
  9. Active Trading Fundamentals

    Five Biggest Obstacles Facing First-Year Traders

    Address these five obstacles and you'll make significant progress as a first-year trader.
  10. Options & Futures

    How To Hedge Put Options Using Binary Options

    Want to hedge your plain vanilla long put option position with binary call options? We show you how.

You May Also Like

Hot Definitions
  1. Hedging Transaction

    A type of transaction that limits investment risk with the use of derivatives, such as options and futures contracts. Hedging ...
  2. Bogey

    A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the ...
  3. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
  4. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  5. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  6. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!