Point & Figure Charts

Stock trading dictionary: meaning, example and how traders use it.

Last updated: October 17, 2026

Definition: Point and figure charts are a technical analysis chart type that records only significant price changes, using columns of Xs for rising prices and Os for falling prices, with no regular time axis and no plotting of minor fluctuations.

How point and figure charts work

Unlike a bar chart or candlestick chart, which draw one mark per period, point and figure (P&F) charts add a mark only when price moves by a set amount. Two settings define the chart:

  • Box size: the price increment each X or O represents, such as $1 for a stock trading around $50.
  • Reversal amount: how many boxes price must move in the opposite direction to start a new column. The traditional choice is a three-box reversal.

Each column contains only Xs (rising) or only Os (falling). While price keeps moving in the same direction, marks are added to the current column; small counter-moves are ignored. Because time is not plotted, a quiet month may add nothing while a volatile day may add several boxes. Charts can be built from closing prices or from each period's high and low.

Example of building a point and figure chart

Suppose a chart uses a $1 box and a three-box reversal, and a stock rises from $40 to $46. The current X column extends from $41 to $46. Price then dips to $44.20: that is less than three boxes ($3) below $46, so nothing is drawn. Next it falls to $42.80. That is a drop of at least $3 from $46, so a new O column starts one box below the top, with Os at $45, $44, and $43.

If price later climbs to $47, the move is more than three boxes up from $43, so a new X column starts and rises above the previous high of $46, creating a buy signal.

Point and figure signals

  • Double top buy: an X column rises one box above the previous X column, a form of breakout.
  • Double bottom sell: an O column falls one box below the previous O column.
  • Triple tops and bottoms: breaks above or below two prior columns at the same level, considered stronger signals.
  • Trendlines: P&F analysts draw 45-degree trendlines from key highs or lows to define bullish and bearish trends.

Columns that cluster at the same levels show congestion, making support and resistance areas easy to spot. Some analysts also use a column-count method to estimate price targets.

Advantages and limitations

P&F charts filter out noise and make trend changes and breakouts very clear. However, they discard time and volume information, and results depend heavily on the chosen box size and reversal setting. Many traders use them alongside conventional charting rather than in place of it.

Frequently asked questions

What do X and O mean on a point and figure chart?

An X column shows rising prices and an O column shows falling prices. Each mark represents one box, a fixed price increment.

What is a three-box reversal?

It means price must move at least three boxes in the opposite direction before a new column is started, filtering out smaller fluctuations.

Do point and figure charts show time?

No. They have no regular time axis; a new mark is added only when price moves by at least one box size.

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For information only, not investment advice. See the disclaimer.