Point & Figure Chart

AAA

DEFINITION of 'Point & Figure Chart'

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


INVESTOPEDIA EXPLAINS '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. Support (Support Level)

    The price level which, historically, a stock has had difficulty ...
  3. Resistance (Resistance Level)

    A chart point or range that caps an increase in the level of ...
  4. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  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 Articles
  1. Active Trading

    Which Direction Is The Market Heading?

    The easy and underused NYSE Bullish Percent Index provides insight into market conditions.
  2. 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.
  3. Options & Futures

    Testing Point-And-Figure Patterns

    Learn the patterns that will help you pinpoint and profit from breakouts.
  4. 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.
  5. Technical Indicators

    Organize Price-Band Relationships In Bollinger Bands®

    Bollinger Bands have become an enormously popular market tool since the 1990s but most traders fail to tap its true potential.
  6. Chart Advisor

    Four Stock Market Swing Trade Ideas

    These four stocks are bouncing off support/resistance, or ready to break though, providing swing trading opportunities.
  7. Trading Strategies

    Risk Management Techniques For Shorting Call Options

    Shorting covered calls is a popular options trade strategy. Here are the methods to mitigate the risk/loss and enhance profits for selling covered calls
  8. Chart Advisor

    Use This ETF To Trade The Swiss Franc

    Traders were stunned last week when the Swiss National Bank removed the currency peg that tied the value of the Swiss franc to the euro.
  9. Trading Strategies

    Day's First Trade Can Serve As Support/Resistance

    The first trade of the day in liquid markets defines a narrow price level that can act as support or resistance for the entire session.
  10. Chart Advisor

    3 Energy Related Stocks Poised For A Pop

    A sharp decline in energy prices have created an interested opportunity in several oil-and-gas related companies. Given the strong downtrends apparent on the charts, most traders would use recent ...

You May Also Like

Hot Definitions
  1. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  2. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  3. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  4. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  5. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  6. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
Trading Center