Dots and Figure Charts

The chart of bars is different than that of dots and figures (or circle or crosses) that only registers the variations of prices. In this way, if there are no changes in the price the chart stays the same.

In a dots and figures chart time does not have any representation although sometimes indications are made as, for example, 10:00 that means “at ten of the morning”. Only the number of variations registered indicates the volume, it is not, then, reflected as an independent entity. The usual is that the price voids are not represented, but if they are represented, they take the form of empty boxes.

The dot and figures chart has at least two great advantages in relation to that of the chart of bars. In the first place, it allows to identify along each session, data related with prices as would be supports, resistance and specially congestion zones; thing that you cannot do with the chart of bars. In the second place, they are more flexible than that of bars because the analyst can vary the size of the box the appearance of the formation.

The size of the boxes
In the dot and figures chart, an X represents a rise in the prices, while an O if the prices fall it indicates that. Each X or O occupies a box, consequently, one of the first things to decide when the beginning the construction of a chart of dots and figures is how much variation will each bar represent. For example, in a chart referred to the price of gold, the size of a box could be of one dollar. In a less sensible chart, each box signifies a variation of five dollars; a more precise scale would be that which do boxes that would be worth fifty cents of a dollar form. Logically, the less value assigned to a box, the more will the chart register a greater detail of the price movements . . . and the more arduous will the construction be.

Criterions for changes
In a dot and figures chart, the analyst passes to the right column each time that the market experiments a change. The question would be of what constitutes a change: a change of direction of a box of magnitude? Of three boxes?

A “1 x 3” chart of dots and figures is that which box is equal to one point and the criterion of change is of three boxes.  The analyst may represent the data in different ways (subtracting in this way sensibility to the chart); he might increase the value of the box or the criterion of the change.

Beginner Money Investing Your Rights as an Investor What can you do to avoid being a victim of such phone calls? The Horizontal Recounting Dots and Figure Charts The Rights of the Shareholder The Proxy Statement The Annual Meeting Protecting Yourself from Fraud To Prevent and To Correct Mistakes Selecting the account executive that is better for you The Internal Audit Department In what way can the SEC help the individual investor that asks for reparation of damage? How to Recover Lost Money - Arbitrage