Point & figure (P&F) charts differ from "normal" price charts in that they completely disregard the passage of time and only chart changes in prices. Rather than having price on the y-axis and time on the x-axis, P&F charts display price changes on both axes.
P&F charts display an "X" when prices rise by the "box size" and display an "O" when prices fall by the box size. Note that no Xs or Os are drawn if prices rise or fall by an amount that is less than the box size.
Each column can contain either Xs or Os, but never both. In order to change columns (e.g., from an X column to an O column), prices must reverse by the "reversal amount" multiplied by the box size. For example, if the box size is 3 points and the reversal amount is 2 boxes, then prices must reverse direction 6 points (3 times 2) in order to change columns. If you are in a column of Xs, the price must fall 6 points in order to change to a column of Os. If you are in a column of Os, the price must rise 6 points in order to change to a column of Xs. The changing of columns signifies a change in the trend of prices. Because prices must reverse direction by the reversal amount, each column in a P&F chart will have at least "reversal amount" boxes.
P&F charts display an "X" when prices rise by the "box size" and display an "O" when prices fall by the box size. Note that no Xs or Os are drawn if prices rise or fall by an amount that is less than the box size.
Each column can contain either Xs or Os, but never both. In order to change columns (e.g., from an X column to an O column), prices must reverse by the "reversal amount" multiplied by the box size. For example, if the box size is 3 points and the reversal amount is 2 boxes, then prices must reverse direction 6 points (3 times 2) in order to change columns. If you are in a column of Xs, the price must fall 6 points in order to change to a column of Os. If you are in a column of Os, the price must rise 6 points in order to change to a column of Xs. The changing of columns signifies a change in the trend of prices. Because prices must reverse direction by the reversal amount, each column in a P&F chart will have at least "reversal amount" boxes.
