FIGURE. 1B: CANDLESTICK CHART (ADIDAS AG).
In contrast to the clear point and figure chart of the conventional candlestick chart contains much more noise, because for each trading day a candle is removed – even if the price change does not significantly precipitated.
BOX SIZE AND REVERSAL THRESHOLD – PARAMETERS IN POINT & FIGURE CHARTS.
The most striking feature of the P&F charts is its structure. X-columns represent rising prices, while O-columns stand for falling prices. Each of these columns in turn consists of individual boxes. Their size can be adjusted individually and determines the intensity of the filtering. An example: On a rising X-column, the box at 100 using a box size of 1 represents the price range from 100 to 100.99. The price therefore has to increase to at least 101 in order to show a new X-box in the chart. Using a box size of 5, a new X-could would only be drawn if the price rises to at least 105, etc. There are two common methods for defining the box size *:
- constant: for example, 1 box = X or Y points or currency units
- percentage: for example, 1 box = 1%
* Tradesignal also offers other modes, for example based on the average true range (ATR). As a basis for the calculation of either closing prices, or high and low price can be used. The latter are more accurate and should be preferred.