Chartered Market Technician (CMT) Practice Exam 2025 - Free CMT Practice Questions and Study Guide

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In constructing a Point and Figure chart, when is a new entry added?

When price has moved equal to or less than the specified box size

When price has moved equal to or more than the specified box size

In a Point and Figure chart, a new entry is added when the price has moved equal to or more than the specified box size. This is a crucial aspect of the charting technique, as it filters out smaller price fluctuations that could otherwise create excessive noise.

The specified box size determines the minimum price movement required to register a mark on the chart. If the price moves equal to or exceeds this value, a new X or O is recorded, indicating a change in price direction or trend. This approach allows traders and analysts to focus on more significant price movements, enhancing the clarity and utility of the chart for trend analysis and decision-making.

While other choices may relate to trading conditions or chart interpretation, they do not directly address the specific mechanism of updating a Point and Figure chart based on price movements.

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When volume increases beyond the average

When the market opens above the previous close

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