Reversal Amount

AAA

DEFINITION of 'Reversal Amount'

The amount of price movement required to shift a chart to the right. This condition is used on charts that only take into consideration price movement instead of both price and time.

INVESTOPEDIA EXPLAINS 'Reversal Amount'

In the context of point and figure (P&F) charts, the reversal amount is the number of boxes (an X or an O) required to cause a reversal. A reversal would be represented by a movement to the next column and a change of direction. If you increase the reversal amount, you will remove columns corresponding to less significant trends and make it easier to detect long-term trends. In terms of Kagi charts, it is the amount (generally around 4%) needed to change the direction of the vertical lines.

RELATED TERMS
  1. Inclusion Amount

    An additional amount of income that a taxpayer may have to report ...
  2. Point & Figure Chart

    A chart that plots day-to-day price movements without taking ...
  3. Box Size

    The minimum price change that must occur before the next mark ...
  4. Reversal

    A change in the direction of a price trend. On a price chart, ...
  5. Kagi Chart

    A type of chart developed by the Japanese in the 1870s that uses ...
  6. Count

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

    Spotting Trend Reversals With MACD

    Knowing when trends are about to reverse is tricky business, but the MACD can help.
  3. Chart Advisor

    Traders Look To Dividend Funds (VIG)

    When uncertainty creeps into the mind of an active trader it is not uncommon for this type of person to turn toward the safety of dividends.
  4. Trading Strategies

    Enter Trades Ahead Of The Emotional Crowd

    Traders profit in highly competitive markets by shifting their strategies backward or forward, entering positions ahead of or behind the emotional crowd.
  5. Chart Advisor

    4 Bullish Flag Patterns You Should Trade Now

    Here are four stocks with flag patterns, highlighting the various ways to trade this chart pattern.
  6. Chart Advisor

    These Transportation Stocks Are at a Crossroads

    These shipping and railroad stocks are testing resistance. A break above signals an emerging uptrend; a break lower, a continuation of the downtrend.
  7. Technical Indicators

    Trade This High Probability Bollinger Band Pattern

    Bollinger Band box patterns set up profitable opportunities when trends give way to well organized trading ranges.
  8. Trading Strategies

    Know How To Manage Gaps On Your Trading Strategy

    Gaps generate profitable strategies right after they print, as well as during retracements that test those levels, often months or years later.
  9. Charts & Patterns

    Why These Are 2015's Most-Promising Bank Stocks

    Which bank stocks should offer the best bang for your buck in 2015? Possibly these, so read on.
  10. Chart Advisor

    Trade Healthcare Providers with this ETF

    In good times and bad times one of the best sectors for retail investors to look into is the healthcare providers. Here's an ETF to consider.

You May Also Like

Hot Definitions
  1. Risk Averse

    A description of an investor who, when faced with two investments with a similar expected return (but different risks), will ...
  2. Fixed-Charge Coverage Ratio

    A ratio that indicates a firm's ability to satisfy fixed financing expenses, such as interest and leases. It is calculated ...
  3. Efficiency Ratio

    Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios ...
  4. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  5. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  6. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
Trading Center