Point & Figure Chart

What is a 'Point & Figure Chart'

A point & figure chart is a chart that plots day-to-day price movements without taking into consideration the passage of time. Point and figure charts are composed of a number of columns that either consist of a series of stacked X's or O's. A column of X's is used to illustrate a rising price, while O's represent a falling price. As you can see from the chart below, this type of chart is used to filter out non-significant price movements, and enables the trader to easily determine critical support and resistance levels. Traders will place orders when the price moves beyond identified support/resistance levels.

Point & Figure Chart


BREAKING DOWN 'Point & Figure Chart'

Additional points are added to the chart once the price changes by more than a predefined amount (known as the box size). For example, if the box size is set to equal one and the price of the asset is $15, then another X will be added to the stack of Xs once the price surpasses $16. Each column consists of only one letter (either X or O) - never both. New columns are placed to the right of the previous column and are only added once the price changes direction by more than a predefined reversal amount.

RELATED TERMS
  1. Box Size

    The minimum price change that must occur before the next mark ...
  2. Count

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

    The amount of price movement required to shift a chart to the ...
  4. Frequency Distribution

    A representation, either in a graphical or tabular format, which ...
  5. Weekly Chart

    A chart where each data point is comprised of the price movement ...
  6. Line Chart

    A style of chart that is created by connecting a series of data ...
Related Articles
  1. Trading

    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.
  2. 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.
  3. Trading

    Testing Point-And-Figure Patterns

    Learn the patterns that will help you pinpoint and profit from breakouts.
  4. Markets

    Mozilla To Stop Developing Firefox OS Phones, Upsetting No One

    Firefox OS is dead, or is it still alive? Here’s the reality check, and what is left for Mozilla and its Firefox operating system.
  5. Personal Finance

    What IRS Form 8949 Is For

    Selling a painting or that lake property? Disposing of your fossil fuel stocks? You need to know about this IRS form.
  6. Personal Finance

    Filling Out Form 4562: Investopedia Explains

    Step-by-step, how to fill out the depreciation and amortization form for your business tax return.
  7. Trading

    Tracking Money Flow In The DJ Industrial Average (AAPL, MSFT)

    Tracking Dow money flow allows market players to identify the index components most likely to produce reliable profits.
  8. Trading

    The Right Way To Set Up Your Trading Screens

    Well-organized trading screens sum up intraday market action, breaking it into digestible bites that can speed up complex decision making.
  9. Markets

    Stock Quotes Explained

    Curious about how stock quotes are compiled and what a trader should know about how? Read on.
  10. Trading

    Analyzing Chart Patterns: Why Charts?

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com Before the advent of computers and data feeds, the use of charts to formulate trading strategies was outside the mainstream ...
RELATED FAQS
  1. Point and Figure Charting Using Count Analysis

    See how traders use count analysis on point and figure charts, and learn why this method differs from more traditional types ... Read Answer >>
  2. How do you the calculate Sharpe ratio in Excel?

    Learn how to use Microsoft Excel to calculate the Sharpe ratio, an investing tool useful for assessing the relationship between ... Read Answer >>
  3. Can you calculate the marginal tax rate in Excel?

    Learn how to approximate taxes owed and if Excel and marginal tax rate data provide an accurate number for personal tax calculation. Read Answer >>
  4. What's an easy way of calculating gross sales in Excel?

    Use Excel to calculate gross sales, display sales data, and establish a template that allows for extensive sales calculations ... Read Answer >>
  5. How can I use Excel as my business's general ledger?

    Follow these steps to set up a general ledger accounting system in Excel. A small business can use Excel as a substitute ... Read Answer >>
  6. How do you calculate r-squared in Excel?

    Calculate R-squared in Microsoft Excel by creating two data ranges to correlate. Use the Correlate formula to correlate both ... Read Answer >>
Hot Definitions
  1. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  2. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  3. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  4. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  5. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  6. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
Trading Center