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Strategies & Market Trends : Point and Figure Charting

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To: Mr. BSL who wrote (718)	2/16/1998 11:08:00 PM
From: Ben Antanaitis	Read Replies (1) of 34816

duke60, Your post brings up one of the more compelling reasons that I personally prefer to use a logarithmic scale for box values. With a logarithmic scale, each box is a fixed percentage greater than the one below it and the same fixed percentage smaller then the box above it. They are independent of the absolute price value of the box. For example, if a reversal is significant at 3 boxes worth $2/box at 105 which is an ~6% total price change, then a reversal should still be ~6% or $.60 for a $10 stock. Using the 'Traditional' scaling you are required to have an almost 15% change to get a 3 box reversal for a $10 stock. Because of it's 'manual adjusting at fixed prices' and the much larger price moves required at the lower extents of the box value ranges of the Traditional scaling, the P&F charts they represent are slower to respond. With log scaling, the chart is just as responsive across the entire spectrum of pricing and charting. The Traditional scale was the original, and it is understood more than log scaling. It is vastly easier to do, without the aid of a computer or special graph paper. But it has some significant drawbacks that logarithmic scaling overcomes. Besides, with EZ-PnF, you just click on an option button and the chart is scaled anyway you like.. ;-) Ben A.

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