Quote from SideShowBob:
I've been trying to figure out the scaling of point and figure charts when drawn with log scales so I can try and draw them on my own and get a feel for how they work. But I can't find anything useful on how the scale is derived. For example, take google :
http://stockcharts.com/webcgi/Pnf.asp?S=GOOG&Y=P&B=1&E=on&N=A&C=2
They had a bad price which they removed, but I can't figure out why the chart starts at 95.5. The low of the first day of google was 95.96 -- so why not use 95.96, or 95. Why 95.5? It's not the low -- it's not the high, nor is it the open. And it's not even a round number....
SSB
Hello Bob,
I keep a number of log charts. They all start with $.01 and then increase by whatever factor you want the log chart to be. The chart you posted is a .01 log chart. If you created one in excel it would come out to the numbers you are seeing.
I use TC2000 for my EOD data. I show GOOG starting on 8/19/04 with:
Open-100.01
High- 104.06
Low- 95.96
Close-100.03
There are various methods to begin a newly created anything P&F chart. My way's right<BG>
One: Assume span between first day high and low is greater than three boxes.
Example: Use the actual data above.
Take a pencil and place a dot in the lowest box you can fill. In this case with the log chart you posted, it's the $96.45 box. Next, place a dot in each higher box as high as you can go, which is the $103.41box. Because this price actions spans three boxes or more, we will make the column either x's or o's.
Next, look at the closing price. Since it's above the center of the range, we start the first column with x's. (If it was below the center, it would be a column of o's.)
Two: Assume span between first day high and low is less than three boxes.
Simply place pencil dots in boxes that you can, and then next day or day's will decide if it's x's or o's.
In conclusion, with the data I have, they went one box too low. Perhaps their data is different than mine.
Gary
