Box Size - Point and Figure Charts

What are Point and Figure (P&F) Box Sizes

Point and figure charts are comprised of X's and O's.  X's represent an up move in a security, while O's represent a down move.  Each move up and down is on a weighted scale, which is dependent on the current price of the stock.  The box size on the chart is completely up to the technician and largely has to deal with the current price of the security and preferred trading time frame.  To take it a step further, when plotting other instruments such as the forex market it is not a good idea to use the same box size for equities, because the volatility and market movement is entirely different.

Some P&F Box Size Standards

In an effort to add some clarity to point and figure charting, it is best to come up with standard box sizes in order to properly assess the price movement of a stock.  Below are some general rules of thumb based on the value of the stock:

200 > Stock Value > 100 = 2 Point Box Size
100 > Stock Value > 20 = 1 Point Box Size
< 20 Stock Value > 5 = .5 Point Box Size
> 5 Stock Value > 0 = .25 Point Box Size

Box Size Chart Example

Below is a box size chart example of Citigroup.  Notice how as the stock declined during the 2008 credit crisis, the point and figure box sizes adjusted accordingly. 

Box Size

Remember that this is just a sample set of values that can be used for plotting point and figure charts.  However, the box size is just one input into how a point and figure chart is plotted, but also the box reversal size.  For example, even if an technician were to plot a $100 stock with a .5 box size, but were to use a 20 box reversal, it would take a $10 price move to print new X's and O's on the chart.
Tim Ord
Ord Oracle

Tim Ord is a technical analyst and expert in the theories of chart analysis using price, volume, and a host of proprietary indicators as a guide...
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