Constructing Points-and-Line Charts with Reversal and Scale Filters
Summary
This indicator converts irregular price movement into a points-and-line chart, reducing emphasis on small moves by requiring price to cross a configurable threshold. The threshold can use a default scale based on price, average true range, or a percentage of price. A reversal amount determines how large a move in the opposite direction must be before the chart changes direction. Users can choose whether the calculations use point-rounded prices, closes, or highs and lows.
The chart can show line or candle-style price displays and can include volume or elapsed days for each formed segment, with data available in tooltips. The document explains the construction and display options but provides no trading rules, performance evaluation, or evidence that the transformed view improves decisions. Results depend on the selected scale, reversal setting, price input method, and chart data, so readings may differ across configurations.
Key ideas
- Price segments form after movement exceeds a chosen scale threshold.
- The threshold can be based on a default price scale, average true range, or a percentage move.
- A configurable reversal amount controls when the chart changes direction.
- Calculations can use rounded points, closing prices, or high and low prices.
- Volume or elapsed time can be displayed for completed segments, but no trading performance evidence is provided.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.