{"id":202096,"date":"2025-02-06T19:40:37","date_gmt":"2025-02-06T19:40:37","guid":{"rendered":"https:\/\/ibkrcampus.eu\/campus\/trading-lessons\/constructing-point-and-figure-charts\/"},"modified":"2025-09-29T19:56:15","modified_gmt":"2025-09-29T19:56:15","slug":"constructing-point-and-figure-charts","status":"publish","type":"trading-lessons","link":"https:\/\/www.interactivebrokers.eu\/campus\/trading-lessons\/constructing-point-and-figure-charts\/","title":{"rendered":"Constructing Point and Figure Charts"},"content":{"rendered":"\n<p>Hey everyone, welcome back. In this lesson\u2014continuing our series here at Interactive Brokers\u2014we\u2019re focusing on how Point &amp; Figure charts are actually formed and what it means when you see X\u2019s and O\u2019s on your Trader Workstation. Now, remember from our previous discussion: these charts are all about price movement, not time. That means instead of drawing a candle every day (or every hour, or what have you), you\u2019re going to plot a new X or O only when the price moves by a specific amount.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p>Here\u2019s the super-quick rundown:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>X\u2019s indicate prices moved up.<\/li>\n\n\n\n<li>O\u2019s indicate prices moved down.<\/li>\n<\/ul>\n\n\n\n<p>You also have the concept of box size (for example, $1 or $2 or $5) which tells you exactly how big that price movement needs to be before you draw a new X or O. Then there\u2019s the reversal amount, which tells you how many boxes it takes to switch from X\u2019s to O\u2019s or vice versa. So, if you have a box size of $1 and a reversal of 3, the price has to move $3 against your last column before you start plotting the other symbol.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p>The main advantage is it cuts out all the small back-and-forth noise that can freak out investors in regular Candlestick or bar charts. For instance, if you\u2019re in an up column (printing X\u2019s), you can ignore those little intraday swings until there\u2019s an actual $3 drop\u2014then and only then do you flip to O\u2019s. It really simplifies your perspective, so you don\u2019t get bogged down by tiny fluctuations that might not matter to your long-term strategy.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p>And the best part? You can tailor the box size and reversal amount to fit your style. Maybe you only care about big $5 or $15 moves on a stock like Apple\u2014just adjust those settings in TWS, and you\u2019re good to go. If the chart\u2019s still printing X\u2019s, no real pullback has happened in your eyes, so you can just sit back and stick to your plan.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p>Overall, Point &amp; Figure charts are a fantastic tool to help you stay disciplined, remove the clutter of short-term price action, and focus on whether the market\u2019s genuinely moving up or down in a significant way. That\u2019s it for this lesson, and we\u2019ll see you next time as we dive deeper into how to use these charts for technical analysis here at Interactive Brokers.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-contributor\"><strong>Contributor<\/strong><\/h3>\n\n\n\n<p>Michael Nauss, CMT<\/p>\n\n\n\n<p>Substack: &nbsp;<a href=\"https:\/\/michaelnausscmt.substack.com\/\">https:\/\/michaelnausscmt.substack.com\/<\/a><\/p>\n\n\n\n<p>Site:&nbsp; <a href=\"https:\/\/www.statsedgetrading.com\/\">www.statsedgetrading.com<\/a>&nbsp;<\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Building Blocks: X\u2019s and O\u2019s<br \/>\nRepresenting price increases (X\u2019s) and decreases (Os\u2019).<br \/>\nSetting Up Your Chart<br \/>\nChoosing appropriate box sizes (price units).<br \/>\nUnderstanding reversal criteria (e.g., three-box reversals).<br \/>\nHands-On Practice<br \/>\nStep-by-step guide to creating a point and figure chart using Interactive Brokers&#8217; Trader Workstation (TWS).<\/p>\n","protected":false},"author":1087,"featured_media":202097,"parent":0,"comment_status":"open","ping_status":"closed","template":"","meta":{"_acf_changed":true,"footnotes":""},"contributors-categories":[2619],"traders-academy":[100,103,89,105],"class_list":{"0":"post-202096","1":"trading-lessons","2":"type-trading-lessons","3":"status-publish","4":"has-post-thumbnail","6":"contributors-categories-stats-edge-trading","7":"traders-academy-beginner-trading","8":"traders-academy-level","9":"traders-academy-stocks","10":"traders-academy-trading-lesson"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.7) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Archives | Traders&#039; Academy | IBKR Campus<\/title>\n<meta name=\"description\" content=\"Choosing appropriate 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