Sherry,
You point out one of the big questions that needs to be answered when attempting to use 'fixed' p&f box value scaling. As the price value go up or down over large ranges, you are not sure what 'box size' to use and when should you 'change it'.
This is when you can appreciate the value of using a box size that is based on percentage of price change (ie log scaling). With log scaling, each vertical box is a set percentage of the box below or the box above, eg you can have a p&f chart where each box represents a 1%, 2%, 3%, 5%,... etc percent price change. With log scaling, the absolute percent change in price is the important thing to look at (isn't that how you really think about your investments ie my investment went up/down 15% rather than my investment went up/down $375?). And with log scaling, a high price stock/index will give you the same patterns as a low price stock/index as long as they have a price move of the same percentage.
I use 2% log box scaling in my work. This gives me p&f charts that require a 6% overall price change for a column to reverse (3 boxes at 2%/box = 6% price change) no matter what absolute dollar value the stock/index has.
You said that you have Metastock. If this is the case, you can try out my point and figure program EZ-PnF for free (download the shareware version) and use it with your own Metastock database (EZ-PnF can directly read Metastock database data, as well as TC2000 and many other data formats). EZ-PnF can produce p&f charts that are 'traditional/Chartcraft/DWA' scaled, or log scaled, or user specified fixed box value scaled.
Stop in , we have a FAQ, sample screen shots, links to sources of free historic stock price data, and much more.
FWIW, here is a link to the Beginners P&F thread where I analyze the current p&f chart of HBAN using a 'traditional/Chartcraft/DWA' scaled p&f chart from EZ-PnF. #reply-10037532
Ben A.
ez-pnf.com |
