Point and Figure Chart
In technical analysis, a chart that records only changes in price to a security or derivative. A point-and-figure chart does not account for time. Price is charted along the y-axis, but nothing is measured on the x-axis. The chart is designed as a series of columns of X and O, with X representing a rising price and O representing a fall. A change in price must exceed a certain amount before it is charted, which is designed to filter out noise. As a result, a point-and-figure chart may change several times in a trading day, or not at all.
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In technical analysis, a chart pattern, peculiar to securities, in which only the significant value changes of a security, a futures contract, or a market average are recorded. The vertical axis represents price, but, unlike nearly all other charts, no variable, including time, is plotted on the horizontal axis. Entries on a point-and-figure chart are made only when a variable changes by a predetermined amount, for example, by one point or two points. A period of days may pass before an entry is recorded. Compare bar chart, line chart.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.