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. Reversal Amount

    The amount of price movement required to shift a chart to the ...
  3. Pattern

    In technical analysis, the distinctive formation created by the ...
  4. Technical Indicator

    Any class of metrics whose value is derived from generic price ...
  5. Count

    A type of technical analysis that uses point and figure charts ...
  6. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
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. Forex Strategies

    How do I use the Ease Of Movement Indicator to create a forex trading strategy?

    Discover how forex traders can apply the ease of movement indicator with currency pairs to and highlight how sensitive price changes are to volume.
  4. Trading Strategies

    What is the difference between the Ease Of Movement Indicator and the MACD?

    Read about the differences between two technical momentum oscillators, the ease of movement indicator and the moving average convergence divergence.
  5. Technical Indicators

    What are the best technical indicators to complement the Ease Of Movement Indicator?

    Find out what kinds of technical indicators and oscillators make the most beneficial confirmation tools when used with the Ease of Movement indicator.
  6. Trading Strategies

    What are the main advantages of using Fibonacci Retracements for trading strategies?

    Read about some of the advantages of the Fibonacci trading system and how retracements can be applied to any instrument to identify trading opportunities.
  7. Trading Strategies

    What is the Haurlan Index formula and how is it calculated?

    Read about the three major components of the Haurlan index, a technical breadth indicator based on the A/D Line of the NYSE created by P.N. Haurlan.
  8. Technical Indicators

    How do traders interpret a divergence of the Haurlan Index?

    Learn about the Haurlan Index, a three-part market breadth indicator used to qualify the strength of market movements and forecast coming movements.
  9. Trading Strategies

    What is a common strategy traders implement when using the Ease Of Movement Indicator?

    Read about some common strategies that traders can implement to make the most of out the ease of movement indicator developed by Richard Arms.
  10. Technical Indicators

    What is a common strategy traders implement when using Fibonacci Clusters?

    Learn common trading strategies traders use for trading with Fibonacci clusters to be able to enter a market at a very advantageous price.

You May Also Like

Hot Definitions
  1. Christmas Island Dollar

    The former currency of Christmas Island, an Australian island in the Indian Ocean that was discovered on December 25, 1643. ...
  2. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  3. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  4. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  5. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  6. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
Trading Center