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. How does a swing trader use the stochastic oscillator?

    The stochastic oscillator is a momentum technical indicator used to indicate points of possible price reversals. Swing traders ... Read Full Answer >>
  2. How can I spot trading opportunities looking at year-to-date (YTD) performance?

    Trading opportunities on the long side can be spotted by looking at stocks with the worst year-to-date (YTD) performance, ... Read Full Answer >>
  3. How does Net Operating Profit After Tax give a clearer view of the operating efficiency ...

    Net operating profit after tax (NOPAT) gives a clearer view of the operating efficiency of a company. While NOPAT is a measure ... Read Full Answer >>
  4. Which is better: dollar cost averaging or value averaging?

    Historical comparisons seem to indicate that value averaging (VA) tends to outperform dollar cost averaging (DCA), offering ... Read Full Answer >>
  5. How are commodity spot prices different than futures prices?

    Commodity spot prices and futures prices are different quotes for different types of contracts. The spot price is the current ... Read Full Answer >>
  6. Why is the Nasdaq more volatile than the NYSE?

    The Nasdaq exchange does tend to regularly evidence more volatility than its major competitor, the New York Stock Exchange ... 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. Chart Advisor

    3 ETFs Poised For A Move Higher

    In this article we'll take a look at three ETFs that are positioning for a move higher. Nearby support levels are providing traders with ideal risk/reward.
  4. Charts & Patterns

    Target Vs. Walmart: Who's Winning The Big Box War?

    Wal-Mart dwarfs Target in number of stores, total assets, and market cap. But which company is more profitable?
  5. Trading Strategies

    Making Money The Wyckoff Way

    Richard Wyckoff established key principles on tops, bottoms, and trends in the early decades of the 20th century.
  6. Options & Futures

    Interpreting Overnight Action In The Index Futures

    Overnight action in index futures sets the tone for the U.S. market day. Traders can use 24-hour index futures charts to predict action in the coming day.
  7. Investing Basics

    Know When To Buy & Hold It, Know When To Fold It

    A passive buy-and-hold strategy using ETFs is one of the most efficient ways of building a portfolio.
  8. Charts & Patterns

    Pros & Cons Of A Passive Buy And Hold Strategy

    Forget market timing: we look at the pros and cons of the tried, tested, and true strategy of buying and holding stocks for the long-term.
  9. Trading Strategies

    Strategies For Playing The Confirmation Trade

    Trends often escalate when the confirmation process is completed after a breakout or breakdown.
  10. Trading Strategies

    Three Types Of Profit Protection Stops

    Three types of profit protection stops lock in profits at different stages in the progression of a successful trade.

You May Also Like

Hot Definitions
  1. Radner Equilibrium

    A theory suggesting that if economic decision makers have unlimited computational capacity for choice among strategies, then ...
  2. Inbound Cash Flow

    Any currency that a company or individual receives through conducting a transaction with another party. Inbound cash flow ...
  3. Social Security

    A United States federal program of social insurance and benefits developed in 1935. The Social Security program's benefits ...
  4. American Dream

    The belief that anyone, regardless of where they were born or what class they were born into, can attain their own version ...
  5. Multicurrency Note Facility

    A credit facility that finances short- to medium-term Euro notes. Multicurrency note facilities are denominated in many currencies. ...
  6. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
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!