- 9 лет ago
- Published в: Irish open golf 2022 betting
- 5
- Автор: Mezikree
It does not use the time scale at all. While the vertical scale is still designated for price, the horizontal scale measures only the number of price reversals or movements and says nothing about the time when they started or ended. At first, such charts may seem strange and alien to a currency trader, but point-and-figure charts are the perfect noise filters and display only information that is really valuable — the prices big enough to bother paying attention to. And traders have full control of what price changes they want to be informed about.
The name XO comes from the classic way such charts are drawn — the bullish movement is represented by the column of X's, while the bearish movement is shown with a column of O's. Of course, nowadays, almost any symbol or just a colored box can be used to chart point-and-figure movements.
Usually, the box size is chosen as 10 pips in Forex trading. Of course, any box size can be used — 6, 50, , or even 1, pips. The smaller the box is the less filtered becomes the price and the more price movements get pictured on the chart. Once the size of the box is chosen and the starting point is decided, the drawing can be started.
When the price goes up another 10 pips, a new X is drawn on top of the first one and so on. If the price fluctuates within 10 pips, nothing is drawn on the chart. As you see, the filtering power of the method is obvious. To draw a bearish movement, it would be necessary to put an O for every 10 pips that the price goes down. In addition to the box size, another important parameter is chosen by a trader — reversal size.
The reversal size is the number of boxes that the price has to go against the current movement to end it and to start drawing a new one in the opposite direction. The reversal size of 3 and 4 is quite common but any integer number equal to or greater than 1 can be chosen as the reversal size. And if it does, the first O is drawn in the next column, one box below the top X of the previous column the price went down ; additionally, two more O's are drown in the same column below the first O as it was the movement of 30 pips, which for a box size of 10 pips means 3 boxes.
The price movements of the asset are symbolically represented not by lines or bars, but by Xs and Os. If the price has gone up, then we see an X and if the price has gone down, we see an O. Each movement in price is represented by a symbol.
If we move four units of price up, then we will see four Xs in the same column. If there is a change in the direction, then a new column begins and the change is reflected by the use of an adequate number of Os in the new column. You can never see Xs and Os sharing a column due to this main principle of the chart creation process. There is an important point to be made, here. The chartist is the one who has to determine how many units the price has to move in the opposite direction for a new column to be created.
Once this number is determined, its called a box. This means that if we are following a stock and it is trading for USD 20, and we are using USD 1 as a unit and our box is 2 units, there will have to be a fall of at least two units before we create a new column. In this case, each unit each USD 1 will be represented by an X. If the price then starts to fall, it will have to fall with at least 2 units before we reflect the change in the new column.
Otherwise the change is considered irrelevant. Lets say the price decreases with USD 3.
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