Screenshot 2013.09.23 14.01.15

There are three ways to specify the reversal amount that is used in the construction of a Kagi chart: Absolute points, Percentage, and Average True Range (ATR).
Absolute Points
With the "Absolute Points" method, you specify the number of points that a stock must reverse before a change in the Kagi line occurs. The advantage of this method is that it is very easy to understand and predict where reversals will occur. The disadvantage is that the point value needs to be different for high priced stocks than for low priced stocks. Typically you will need to choose a value that is roughly 1/20th the average price of the stock during the time frame you want to chart. Common values include 1, 2, 4, and 10.
Important Note: The Default for
Kagi "Pts" method is currently 14 which is too large for most stocks. You'll need to change it to a smaller number to get a useful chart.
The "Percentage" method causes a reversal each time prices move more that the percentage that you specified. This has the advantage of not needing to change the setting if the value of the stock changes significantly during the time period being charted. The disadvantage is that it isn't easy to predict exactly where the next reversal will occur.
Average True Range (ATR)
The "Average True Range (ATR)" method uses the value of the ATR indicator to determine where the next reversal should occur. The ATR indicator is designed to ignore the normal volatility of a stock and thus it can "automatically" find good reversal levels regardless of the value or volatility of the stock selected. ATR with a value of 14 is the default value for Kagi charts and should generate a very usable chart in most cases.