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1991issue C031-3

Constructing point-and-figure box and reversal charts

Point-and-figure construction uses two parameters. Box size is the smallest price increment that may be posted as one filled box, and reversal size is the number of boxes a contrary move must cover before a new column may be started. Columns of X and O marks are posted only after those rules are met.

  • Box size is the smallest price increment that may be posted as one filled box, and reversal size is the number of boxes a contrary move must cover before a new column may be started.
  • Rising prices fill an X column and falling prices fill an O column. A leftover smaller than one full box is an incomplete box and is omitted.
  • If a contrary move stays inside the reversal threshold, the result is a same-column continuation, and a later move can still extend the existing column.
  • Time is not required to build the chart. A month letter may be added only as a reference frame, and a horizontal count of a trading-range consolidation can be added to the consolidation low to form a bullish objective hypothesis.
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Current trackPoint and figure chart37 readings

Two construction parameters

Point-and-figure construction uses two parameters. Box size is the smallest price increment that may be posted as one filled box. Reversal size is the number of boxes a contrary move must cover before a new column may be started.

A one-by-three construction posts only after a full one-dollar box is covered and starts a new column only after a contrary move of at least three dollars.

The same box-and-reversal construction can be applied to any market or indicator. The worked example uses a stock.

How an X column and an O column are posted

Rising prices are posted as a vertical stack of X marks. That stack is an X column. Falling prices are posted as a vertical stack of O marks. That stack is an O column. A qualifying reversal is posted in the next column.

A box is filled only after price covers the entire box value. Any leftover smaller than one box is an incomplete box and is omitted from the chart.

Same-column continuation

If a contrary move stays inside the reversal threshold, no new column is added. That failed reversal test is a same-column continuation. A later continuation can then extend the existing column.

Time marks and a horizontal count

Time is not required to construct or analyze the chart. A month letter or a calendar-day posting may be added only as a reference frame. A month letter is an optional first-letter-of-the-month mark.

A sideways count of a trading-range consolidation, historically called the figure, can be added to the consolidation low to form a bullish objective hypothesis. That sideways measurement is a horizontal count.

Earlier posting marks

Earlier posting styles used a point or bullet for a trade at a price, a check mark, or the day of the month in place of X and O symbols.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
8 of 30 in the Point and figure chart track
19911-7 pp.Next on Point and figure chartConstructing a close-tested one-two ladder on a point-and-figure chartA point-and-figure chart is posted from box size and reversal size, drops reversals below the threshold, and does not use time as a plotting dimension.
All readings on this track · 30 readings
  1. 1988Constructing trend definitions with filters and lines
  2. 1989Reversal count as the clock on point-and-figure charts
  3. 1989Point-and-figure setup and session-average entry windows
  4. 1989Two-scale point-and-figure trendlines and stop placement
  5. 1989Adjusted net asset value, tighter reversals, and written stops on a fund point-and-figure chart
  6. 1990Stack option odds after point-and-figure signals
  7. 1991Constructing a point-and-figure downtrend-break
  8. 1991Constructing point-and-figure box and reversal charts
  9. 1991Constructing a close-tested one-two ladder on a point-and-figure chart
  10. 1992Point-and-figure, breadth, and volume as falsifiable hypotheses
  11. 1992Three-gate stock selection with ranks and point and figure
  12. 1993Constructing combined stochastics and point-and-figure relative strength
  13. 1997Point-and-figure box scale and reversal construction
  14. 2000Cotton weekly point-and-figure: late-stage decline, named weekly close
  15. 2000Constructing point-and-figure charts for support, resistance, and breakouts
  16. 2001Swiss franc: seasonal permission and a weekly point-and-figure breakout
  17. 2001Constructing point-and-figure boxes and reversals
  18. 2002Point-and-figure construction: box, live column, and three-box reversal
  19. 2003E-mini point-and-figure box-size and a descending-triangle breakout
  20. 2003A reconstruction critique of point-and-figure daytrading
  21. 2004Point-and-figure column moving-average crossovers
  22. 2005Box-series transforms for trend and channel work
  23. 2006Constructing bearish point-and-figure support breaks
  24. 2008Point-and-figure forex breakouts and triangles
  25. 2012From tactile charts to written trade rules
  26. 2013Combine a Point and figure chart and Moving-average crossover inside one System optimization procedure
  27. 2015Point-and-figure time and volume limits are conventions to test
  28. 2016Measurement-first critique of indicator defaults
  29. 2017Point-and-figure construction, reversals, and column-based overlays
  30. 2019A 2019 charting case as a three-check trend classroom
By fieldTrend and channels181 readingsBy year199198 readings
All 37 readings tagged Point and figure chart
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