In Point and Figure charts, the prices of a symbol are plotted in columns of X’s and O’s. Rising prices are plotted as X’s, whereas falling prices are plotted as O’s.
A new additional "box" (X or O) in an existing column is only plotted when the price moves at least as much as the box size that can be configured freely for each symbol. Each column can only contain either X’s or O’s. A column therefore signifies a trend in one direction (X’s show an upwards trend, O’s show a downwards trend).
A new column is always drawn in the opposite direction. For example, if the last column contained only X’s, the next column will contain O’s. Before a new column can be drawn, a reversal must take place. This means that the price must move into the opposite direction for at least the reversal amount. The reversal amount is measured in numbers of boxes, for example a reversal amount of 3 means that the price must drop for at least three times the box size before a new column of O’s will be established. In other words, until a new column would not hold at least 3 boxes, it is not drawn in this example.
A Point and Figure chart therefore does not show a linear representation of time. If the price movements are small and the box size is large, it can take a longer time before a new box in either direction is drawn. A trend reversal takes even longer, but is therefore also more significant as soon as it shows on the Point and Figure chart.
You can use different data compressions in a Point and Figure chart (daily, intraday, ticks etc.): At the end of each period, the price change of the previous period is determined, and new boxes or columns are added to the chart only if the price changes are significant enough to justify this, according to the rules outlined above. For example, if you use a 5-minute Point and Figure chart, TeleTrader WorkStation will look at the High and Low prices of the 5-minute interval and eventually add new boxes to the chart if there have been significant price moves. Therefore, a 5-minute Point and Figure chart looks differently than a daily Point and Figure chart, for example.
Tip We recommend to change the chart properties setting under General > Time Region to a fixed period when using Point and Figure charts. If you use a dynamic time region, for example a fixed number of records, the Point and Figure chart will be recalculated every time a new record is added and the oldest record is taken out of the chart. Therefore, the display of historical data in the chart could vary over time, as it also depends on the initial data in the chart. Use the option Period (from-to) to avoid this.
▪ Right-click on the Point and Figure chart and choose Properties.
▪ On the left side of the dialog, select the name of the chart pane, the name of the symbol and then Display. For example: Pane 1 > DAX > Display.
▪ On the right side of the dialog, clear the Auto Box Size check box so that you can enter your own box size.
Note When the Auto Box Size feature is activated, it always chooses a reasonable box size automatically, depending on the symbol, the data compression, and the loaded data records.
▪ In the Box Size field, enter the value that the price has to move before a new box is added to the chart.
▪ In the Reversal field, change the reversal amount by clicking the up or down arrows to the number of boxes that the price has to move into the opposite direction before a reversal takes place.
Note You can save your settings as default for the current symbol and data compression by clicking the Set As Default button.