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Registered User
Joined: 12/30/2004
Posts: 369
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Hello,
I've watched the tutorial about Logarithmic and Arithmetic chart scalling, and the bottom line was that it depends on how you would care to place the chart: By Price or by Percentage.
Fine, however it makes a huge difference when you are drawing trend lines. They are absolutely not interchangeble. When I switch from Arithmetic to Logarithmic scalling the trend lines are all misplaced and not only that, but most important of all, the price channel is no longer valid.
In Logarithmic scalling my stock TRE is below the price channel, however in
Arithmetic scalling the price is hitting the top of the price channel, giving a sell signal.
So what gives?
Thank you,
amberpax
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Worden Trainer
Joined: 10/1/2004
Posts: 18,819
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You are witnessing the difference in scaling.
Take a step back... don't look at your TL or Channels... look how the price graph changes when you switch from one to the other.
The two scalings are not interchangeable... I hope we never gave you that impression.
Now that you understand the difference between the two, you can make an informed decision on which makes the most sense for you.
- Craig
Here to Help!
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Worden Trainer
Joined: 10/7/2004
Posts: 65,138
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amberpax,
Just to expound on Craig's comments, straight lines in Arithmetic and Logarithmic scaling are not interchangeable. It's not very elegant, but if you plot the two following Custom Indicators on TRE and switch between Arithmetic and Logarithmic scaling, you will see what I mean (it's quite slow, but it's only designed to be used as an example on TRE and then deleted):
Arithmetic Straight Line connecting the 5/13/05 Open and 5/2/06 Close:
Select Chart Template | Add Indicator | Indicator | Top.
-Visible: Checked
-Center Zero Line: Unchecked
-Plot using price scale: Checked
-Smoothing Average: 1
-Indicator Formula: (V=9951)*(-8.25) + (V=16832)*(-8.21938271604938) + (V=12822)*(-8.18876543209877) + (V=12641)*(-8.15814814814815) + (V=16758)*(-8.12753086419753) + (V=18342)*(-8.09691358024691) + (V=5886)*(-8.0662962962963) + (V=7002)*(-8.03567901234568) + (V=16893)*(-8.00506172839506) + (V=20907)*(-7.97444444444444) + (V=8684)*(C>6.85)*(7.94382716049383) + (V=6054)*(-7.91320987654321) + (V=3659)*(-7.88259259259259) + (V=4137)*(-7.85197530864198) + (V=9037)*(-7.82135802469136) + (V=8027)*(-7.79074074074074) + (V=12332)*(-7.76012345679012) + (V=7803)*(-7.72950617283951) + (V=6161)*(-7.69888888888889) + (V=5437)*(-7.66827160493827) + (V=8813)*(-7.63765432098765) + (V=7916)*(-7.60703703703704) + (V=14475)*(-7.57641975308642) + (V=8887)*(-7.5458024691358) + (V=7194)*(-7.51518518518519) + (V=6772)*(-7.48456790123457) + (V=6557)*(-7.45395061728395) + (V=5331)*(-7.42333333333333) + (V=2741)*(-7.39271604938272) + (V=8632)*(-7.3620987654321) + (V=6247)*(-7.33148148148148) + (V=3083)*(-7.30086419753086) + (V=4182)*(-7.27024691358025) + (V=4685)*(-7.23962962962963) + (V=4002)*(-7.20901234567901) + (V=4729)*(-7.17839506172839) + (V=4340)*(-7.14777777777778) + (V=2553)*(-7.11716049382716) + (V=7492)*(-7.08654320987654) + (V=5894)*(-7.05592592592593) + (V=8855)*(-7.02530864197531) + (V=7684)*(-6.99469135802469) + (V=17567)*(-6.96407407407407) + (V=6743)*(-6.93345679012346) + (V=9761)*(-6.90283950617284) + (V=3821)*(-6.87222222222222) + (V=6297)*(-6.8416049382716) + (V=6044)*(-6.81098765432099) + (V=7399)*(-6.78037037037037) + (V=6724)*(-6.74975308641975) + (V=7687)*(-6.71913580246914) + (V=6024)*(-6.68851851851852) + (V=6858)*(-6.6579012345679) + (V=7435)*(-6.62728395061728) + (V=9119)*(-6.59666666666667) + (V=11946)*(-6.56604938271605) + (V=10530)*(-6.53543209876543) + (V=14961)*(-6.50481481481482) + (V=21801)*(-6.4741975308642) + (V=6381)*(-6.44358024691358) + (V=7233)*(-6.41296296296296) + (V=9453)*(-6.38234567901235) + (V=6278)*(-6.35172839506173) + (V=16327)*(-6.32111111111111) + (V=10060)*(-6.29049382716049) + (V=8684)*(C<6.85)*(6.25987654320988) + (V=14237)*(-6.22925925925926) + (V=18026)*(-6.19864197530864) + (V=11136)*(-6.16802469135803) + (V=14513)*(-6.13740740740741) + (V=18996)*(-6.10679012345679) + (V=13104)*(-6.07617283950617) + (V=17028)*(-6.04555555555556) + (V=23435)*(-6.01493827160494) + (V=16583)*(-5.98432098765432) + (V=11518)*(-5.9537037037037) + (V=7554)*(-5.92308641975309) + (V=7408)*(-5.89246913580247) + (V=11935)*(-5.86185185185185) + (V=21447)*(-5.83123456790123) + (V=32149)*(-5.80061728395062) + (V=15115)*(-5.77) + (V=14081)*(-5.73938271604938) + (V=13813)*(-5.70876543209877) + (V=25680)*(-5.67814814814815) + (V=21690)*(-5.64753086419753) + (V=16742)*(-5.61691358024691) + (V=22203)*(-5.5862962962963) + (V=16093)*(-5.55567901234568) + (V=9527)*(-5.52506172839506) + (V=10561)*(-5.49444444444444) + (V=17783)*(-5.46382716049383) + (V=13364)*(-5.43320987654321) + (V=16768)*(-5.40259259259259) + (V=7153)*(-5.37197530864198) + (V=9181)*(-5.34135802469136) + (V=13308)*(-5.31074074074074) + (V=12261)*(-5.28012345679012) + (V=8459)*(-5.24950617283951) + (V=11695)*(-5.21888888888889) + (V=8617)*(-5.18827160493827) + (V=6542)*(-5.15765432098766) + (V=8347)*(-5.12703703703704) + (V=6284)*(-5.09641975308642) + (V=5811)*(-5.0658024691358) + (V=8370)*(-5.03518518518519) + (V=6007)*(-5.00456790123457) + (V=3295)*(-4.97395061728395) + (V=4101)*(-4.94333333333333) + (V=5264)*(-4.91271604938272) + (V=9852)*(-4.8820987654321) + (V=8033)*(-4.85148148148148) + (V=15109)*(-4.82086419753086) + (V=8971)*(-4.79024691358025) + (V=8665)*(-4.75962962962963) + (V=10095)*(-4.72901234567901) + (V=16989)*(-4.6983950617284) + (V=9574)*(-4.66777777777778) + (V=9022)*(-4.63716049382716) + (V=4853)*(-4.60654320987654) + (V=7636)*(-4.57592592592593) + (V=10885)*(-4.54530864197531) + (V=15740)*(-4.51469135802469) + (V=10391)*(-4.48407407407407) + (V=10691)*(-4.45345679012346) + (V=4499)*(-4.42283950617284) + (V=2189)*(-4.39222222222222) + (V=2467)*(-4.36160493827161) + (V=2170)*(-4.33098765432099) + (V=6981)*(-4.30037037037037) + (V=2429)*(-4.26975308641975) + (V=5633)*(-4.23913580246914) + (V=5042)*(-4.20851851851852) + (V=9943)*(-4.1779012345679) + (V=2525)*(-4.14728395061728) + (V=2866)*(-4.11666666666667) + (V=4448)*(-4.08604938271605) + (V=6617)*(-4.05543209876543) + (V=5452)*(-4.02481481481481) + (V=4216)*(-3.9941975308642) + (V=8655)*(-3.96358024691358) + (V=12240)*(-3.93296296296296) + (V=6985)*(-3.90234567901235) + (V=6566)*(-3.87172839506173) + (V=5519)*(-3.84111111111111) + (V=14027)*(-3.81049382716049) + (V=6217)*(-3.77987654320988) + (V=4393)*(-3.74925925925926) + (V=12787)*(-3.71864197530864) + (V=5803)*(-3.68802469135803) + (V=6565)*(-3.65740740740741) + (V=6427)*(-3.62679012345679) + (V=8126)*(-3.59617283950617) + (V=7133)*(-3.56555555555556) + (V=3168)*(-3.53493827160494) + (V=9504)*(-3.50432098765432) + (V=7810)*(-3.4737037037037) + (V=12581)*(-3.44308641975309) + (V=10432)*(-3.41246913580247) + (V=6464)*(-3.38185185185185) + (V=18561)*(-3.35123456790124) + (V=10134)*(-3.32061728395062) + (V=3496)*(-3.29) + (V=2957)*(-3.25938271604938) + (V=2502)*(-3.22876543209877) + (V=3301)*(-3.19814814814815) + (V=5481)*(-3.16753086419753) + (V=4474)*(-3.13691358024691) + (V=6755)*(-3.1062962962963) + (V=2625)*(-3.07567901234568) + (V=3065)*(-3.04506172839506) + (V=1986)*(-3.01444444444444) + (V=4017)*(-2.98382716049383) + (V=2327)*(-2.95320987654321) + (V=3212)*(-2.92259259259259) + (V=1194)*(-2.89197530864198) + (V=2107)*(-2.86135802469136) + (V=2743)*(-2.83074074074074) + (V=2256)*(-2.80012345679012) + (V=1795)*(-2.76950617283951) + (V=1809)*(-2.73888888888889) + (V=5296)*(-2.70827160493827) + (V=6013)*(-2.67765432098765) + (V=6558)*(-2.64703703703704) + (V=4334)*(-2.61641975308642) + (V=2102)*(-2.5858024691358) + (V=3234)*(-2.55518518518519) + (V=4854)*(-2.52456790123457) + (V=1347)*(-2.49395061728395) + (V=1178)*(-2.46333333333333) + (V=1754)*(-2.43271604938272) + (V=1489)*(-2.4020987654321) + (V=2078)*(-2.37148148148148) + (V=815)*(-2.34086419753086) + (V=1060)*(-2.31024691358025) + (V=1727)*(-2.27962962962963) + (V=3235)*(-2.24901234567901) + (V=1693)*(-2.2183950617284) + (V=1613)*(-2.18777777777778) + (V=1213)*(-2.15716049382716) + (V=445)*(-2.12654320987654) + (V=1095)*(-2.09592592592593) + (V=1840)*(-2.06530864197531) + (V=1740)*(-2.03469135802469) + (V=1025)*(-2.00407407407408) + (V=1571)*(-1.97345679012346) + (V=1445)*(-1.94283950617284) + (V=457)*(-1.91222222222222) + (V=948)*(-1.88160493827161) + (V=1305)*(-1.85098765432099) + (V=939)*(-1.82037037037037) + (V=761)*(-1.78975308641975) + (V=801)*(C>1.01)*(1.75913580246914) + (V=1192)*(-1.72851851851852) + (V=758)*(-1.6979012345679) + (V=2841)*(-1.66728395061728) + (V=2246)*(-1.63666666666667) + (V=2240)*(-1.60604938271605) + (V=2321)*(-1.57543209876543) + (V=3909)*(-1.54481481481482) + (V=3051)*(-1.5141975308642) + (V=1512)*(-1.48358024691358) + (V=549)*(-1.45296296296296) + (V=1081)*(-1.42234567901235) + (V=1528)*(-1.39172839506173) + (V=1298)*(-1.36111111111111) + (V=1125)*(-1.33049382716049) + (V=295)*(-1.29987654320988) + (V=666)*(-1.26925925925926) + (V=568)*(-1.23864197530864) + (V=985)*(-1.20802469135803) + (V=988)*(C>.86)*(1.17740740740741) + (V=567)*(-1.14679012345679) + (V=974)*(-1.11617283950617) + (V=817)*(-1.08555555555556) + (V=1367)*(-1.05493827160494) + (V=801)*(C<.86)*(1.02432098765432) + (V=988)*(C<.86)*(0.993703703703704) + (V=578)*(-0.963086419753087) + (V=1070)*(-0.93246913580247) + (V=450)*(-0.901851851851853) + (V=1135)*(-0.871234567901235) + (V=1583)*(-0.840617283950618) + (V=1224)*(-0.81)
Logarithmic Straight Line connecting the 5/13/05 Open and 5/2/06 Close:
Select Chart Template | Add Indicator | Indicator | Top.
-Visible: Checked
-Center Zero Line: Unchecked
-Plot using price scale: Checked
-Smoothing Average: 1
-Indicator Formula: (V=9951)*(-8.25) + (V=16832)*(-8.17157795744585) + (V=12822)*(-8.09390137146865) + (V=12641)*(-8.01696315598005) + (V=16758)*(-7.94075629225012) + (V=18342)*(-7.86527382826691) + (V=5886)*(-7.79050887810218) + (V=7002)*(-7.71645462128332) + (V=16893)*(-7.64310430217107) + (V=20907)*(-7.57045122934328) + (V=8684)*(C>6.85)*(7.49848877498446) + (V=6054)*(-7.42721037428115) + (V=3659)*(-7.35660952482307) + (V=4137)*(-7.2866797860099) + (V=9037)*(-7.21741477846377) + (V=8027)*(-7.14880818344724) + (V=12332)*(-7.08085374228694) + (V=7803)*(-7.01354525580257) + (V=6161)*(-6.94687658374139) + (V=5437)*(-6.88084164421808) + (V=8813)*(-6.81543441315989) + (V=7916)*(-6.75064892375715) + (V=14475)*(-6.68647926591887) + (V=8887)*(-6.62291958573365) + (V=7194)*(-6.5599640849356) + (V=6772)*(-6.49760702037543) + (V=6557)*(-6.43584270349654) + (V=5331)*(-6.37466549981603) + (V=2741)*(-6.31406982841071) + (V=8632)*(-6.254050161408) + (V=6247)*(-6.19460102348162) + (V=3083)*(-6.13571699135213) + (V=4182)*(-6.07739269329213) + (V=4685)*(-6.01962280863631) + (V=4002)*(-5.96240206729598) + (V=4729)*(-5.90572524927836) + (V=4340)*(-5.84958718421037) + (V=2553)*(-5.79398275086694) + (V=7492)*(-5.73890687670385) + (V=5894)*(-5.68435453739499) + (V=8855)*(-5.63032075637396) + (V=7684)*(-5.57680060438016) + (V=17567)*(-5.52378919900905) + (V=6743)*(-5.47128170426676) + (V=9761)*(-5.41927333012897) + (V=3821)*(-5.36775933210389) + (V=6297)*(-5.31673501079944) + (V=6044)*(-5.26619571149457) + (V=7399)*(-5.21613682371465) + (V=6724)*(-5.16655378081081) + (V=7687)*(-5.1174420595434) + (V=6024)*(-5.06879717966935) + (V=6858)*(-5.02061470353341) + (V=7435)*(-4.9728902356634) + (V=9119)*(-4.92561942236917) + (V=11946)*(-4.87879795134545) + (V=10530)*(-4.83242155127846) + (V=14961)*(-4.78648599145627) + (V=21801)*(-4.74098708138282) + (V=6381)*(-4.69592067039567) + (V=7233)*(-4.65128264728732) + (V=9453)*(-4.60706893993022) + (V=6278)*(-4.56327551490521) + (V=16327)*(-4.51989837713365) + (V=10060)*(-4.4769335695129) + (V=8684)*(C<6.85)*(4.43437717255537) + (V=14237)*(-4.39222530403095) + (V=18026)*(-4.35047411861285) + (V=11136)*(-4.30911980752681) + (V=14513)*(-4.26815859820366) + (V=18996)*(-4.22758675393512) + (V=13104)*(-4.18740057353297) + (V=17028)*(-4.14759639099138) + (V=23435)*(-4.10817057515247) + (V=16583)*(-4.06911952937507) + (V=11518)*(-4.0304396912066) + (V=7554)*(-3.99212753205812) + (V=7408)*(-3.95417955688237) + (V=11935)*(-3.91659230385499) + (V=21447)*(-3.87936234405869) + (V=32149)*(-3.84248628117044) + (V=15115)*(-3.80596075115166) + (V=14081)*(-3.76978242194129) + (V=13813)*(-3.73394799315187) + (V=25680)*(-3.69845419576844) + (V=21690)*(-3.66329779185033) + (V=16742)*(-3.62847557423574) + (V=22203)*(-3.59398436624923) + (V=16093)*(-3.55982102141186) + (V=9527)*(-3.5259824231542) + (V=10561)*(-3.492465484532) + (V=17783)*(-3.45926714794458) + (V=13364)*(-3.42638438485589) + (V=16768)*(-3.39381419551826) + (V=7153)*(-3.36155360869872) + (V=9181)*(-3.32959968140796) + (V=13308)*(-3.29794949863183) + (V=12261)*(-3.26660017306546) + (V=8459)*(-3.23554884484983) + (V=11695)*(-3.20479268131089) + (V=8617)*(-3.17432887670114) + (V=6542)*(-3.14415465194369) + (V=8347)*(-3.11426725437872) + (V=6284)*(-3.08466395751238) + (V=5811)*(-3.05534206076805) + (V=8370)*(-3.02629888923999) + (V=6007)*(-2.99753179344932) + (V=3295)*(-2.96903814910232) + (V=4101)*(-2.94081535685102) + (V=5264)*(-2.91286084205607) + (V=9852)*(-2.88517205455189) + (V=8033)*(-2.857746468414) + (V=15109)*(-2.83058158172861) + (V=8971)*(-2.80367491636439) + (V=8665)*(-2.77702401774638) + (V=10095)*(-2.75062645463206) + (V=16989)*(-2.72447981888961) + (V=9574)*(-2.69858172527817) + (V=9022)*(-2.67292981123027) + (V=4853)*(-2.64752173663633) + (V=7636)*(-2.62235518363111) + (V=10885)*(-2.59742785638234) + (V=15740)*(-2.57273748088124) + (V=10391)*(-2.54828180473507) + (V=10691)*(-2.52405859696169) + (V=4499)*(-2.50006564778597) + (V=2189)*(-2.47630076843829) + (V=2467)*(-2.45276179095479) + (V=2170)*(-2.42944656797963) + (V=6981)*(-2.40635297256913) + (V=2429)*(-2.38347889799765) + (V=5633)*(-2.3608222575655) + (V=5042)*(-2.33838098440851) + (V=9943)*(-2.31615303130951) + (V=2525)*(-2.29413637051159) + (V=2866)*(-2.27232899353306) + (V=4448)*(-2.25072891098428) + (V=6617)*(-2.22933415238614) + (V=5452)*(-2.20814276599033) + (V=4216)*(-2.18715281860127) + (V=8655)*(-2.16636239539977) + (V=12240)*(-2.14576959976833) + (V=6985)*(-2.12537255311814) + (V=6566)*(-2.1051693947177) + (V=5519)*(-2.08515828152305) + (V=14027)*(-2.06533738800967) + (V=6217)*(-2.04570490600594) + (V=4393)*(-2.02625904452816) + (V=12787)*(-2.00699802961721) + (V=5803)*(-1.98792010417668) + (V=6565)*(-1.9690235278126) + (V=6427)*(-1.95030657667467) + (V=8126)*(-1.93176754329901) + (V=7133)*(-1.91340473645234) + (V=3168)*(-1.89521648097779) + (V=9504)*(-1.87720111764201) + (V=7810)*(-1.85935700298382) + (V=12581)*(-1.8416825091643) + (V=10432)*(-1.82417602381829) + (V=6464)*(-1.80683594990728) + (V=18561)*(-1.78966070557375) + (V=10134)*(-1.77264872399682) + (V=3496)*(-1.75579845324936) + (V=2957)*(-1.7391083561564) + (V=2502)*(-1.72257691015489) + (V=3301)*(-1.70620260715481) + (V=5481)*(-1.6899839534016) + (V=4474)*(-1.67391946933988) + (V=6755)*(-1.65800768947849) + (V=2625)*(-1.64224716225678) + (V=3065)*(-1.62663644991222) + (V=1986)*(-1.6111741283492) + (V=4017)*(-1.59585878700917) + (V=2327)*(-1.58068902874191) + (V=3212)*(-1.56566346967808) + (V=1194)*(-1.55078073910301) + (V=2107)*(-1.53603947933164) + (V=2743)*(-1.52143834558464) + (V=2256)*(-1.50697600586577) + (V=1795)*(-1.49265114084034) + (V=1809)*(-1.47846244371486) + (V=5296)*(-1.46440862011784) + (V=6013)*(-1.45048838798168) + (V=6558)*(-1.43670047742576) + (V=4334)*(-1.42304363064055) + (V=2102)*(-1.40951660177288) + (V=3234)*(-1.39611815681231) + (V=4854)*(-1.3828470734785) + (V=1347)*(-1.36970214110978) + (V=1178)*(-1.35668216055264) + (V=1754)*(-1.34378594405239) + (V=1489)*(-1.33101231514477) + (V=2078)*(-1.31836010854863) + (V=815)*(-1.30582817005965) + (V=1060)*(-1.29341535644503) + (V=1727)*(-1.2811205353392) + (V=3235)*(-1.26894258514052) + (V=1693)*(-1.25688039490895) + (V=1613)*(-1.24493286426474) + (V=1213)*(-1.23309890328798) + (V=445)*(-1.22137743241927) + (V=1095)*(-1.20976738236113) + (V=1840)*(-1.19826769398053) + (V=1740)*(-1.18687731821224) + (V=1025)*(-1.17559521596313) + (V=1571)*(-1.16442035801737) + (V=1445)*(-1.15335172494257) + (V=457)*(-1.14238830699673) + (V=948)*(-1.13152910403619) + (V=1305)*(-1.12077312542434) + (V=939)*(-1.11011938994126) + (V=761)*(-1.09956692569424) + (V=801)*(C>1.01)*(1.08911477002906) + (V=1192)*(-1.07876196944222) + (V=758)*(-1.06850757949396) + (V=2841)*(-1.05835066472204) + (V=2246)*(-1.04829029855648) + (V=2240)*(-1.03832556323499) + (V=2321)*(-1.02845554971925) + (V=3909)*(-1.01867935761198) + (V=3051)*(-1.00899609507483) + (V=1512)*(-0.99940487874698) + (V=549)*(-0.989904833664588) + (V=1081)*(-0.980495093180948) + (V=1528)*(-0.971174798887446) + (V=1298)*(-0.96194310053524) + (V=1125)*(-0.952799155957704) + (V=295)*(-0.943742130993595) + (V=666)*(-0.934771199410958) + (V=568)*(-0.925885542831755) + (V=985)*(-0.917084350657202) + (V=988)*(C>.86)*(0.90836681999383) + (V=567)*(-0.899732155580234) + (V=974)*(-0.891179569714526) + (V=817)*(-0.88270828218248) + (V=1367)*(-0.874317520186352) + (V=801)*(C<.86)*(0.866006518274384) + (V=988)*(C<.86)*(0.857774518270975) + (V=578)*(-0.849620769207513) + (V=1070)*(-0.841544527253873) + (V=450)*(-0.833545055650557) + (V=1135)*(-0.82562162464148) + (V=1583)*(-0.817773511407406) + (V=1224)*(-0.81)
Prices on one side of the Arithmetic Straight Line are not necessarily on the same side of the Logarithmic Shraight Line and this is as it should be.
You may wish to review the following if you are having any problems creating these Custom Indicators:
Plotting Custom Indicators with Examples
-Bruce
Personal Criteria Formulas
TC2000 Support Articles
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Registered User
Joined: 12/30/2004
Posts: 369
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When I switch from arithmetic to logarithmic the chart scaling does not change visibly. My impression is that in logartithmic the scaling should get smaller and smaller as the price increases. I do not see that in telechart.
Thank you both fore your help.
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Worden Trainer
Joined: 10/1/2004
Posts: 18,819
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The lines stay the same distance from each other... but look at the values for each of those lines. The net difference between them increases as the chart goes up.
You are likely use to seeing a log chart that plots the Y-axis lines the same net difference from each other giving the impression that the scaling "gets smaller".
Both the scaling (the values on the Y-axis) and the price chart changes as you switch from Arith to Log.
- Craig
Here to Help!
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Registered User
Joined: 12/30/2004
Posts: 369
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Thank you for your help!
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Registered User
Joined: 1/28/2005
Posts: 6,049
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amberpax
The simplest way to think of a log/arithmetic chart.
Log scale is equal in percent change.
Arithmetic is equal in dollar change.
A 10% change on a 10$ stock is 1 dollar.
A 10 % change on a 100$ stock is 10 dollars.
If you imagine a stock at 10$ a share and increasing in price 1% each day.
On a Log scale it will increase with a nice steady slope.
(the percent change is the same)
On a arithmetic scale it will rise up and look like it is moving faster
as the price increases and running away to the upside.
(this is because the percent change is the same but the dollar change is
getting larger and larger)
Also realize that if you look at a flat stock that does not have a lot of price change.
You will see very little difference between the two settings.
The difference between log/arithmetic setting will always be more dramatic
when you are looking at a long time frame with large price movement.
Hope that helps
Good Luck
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Worden Trainer
Joined: 10/1/2004
Posts: 18,819
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You're welcome, amberpax!
- Craig
Here to Help!
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Registered User
Joined: 12/30/2004
Posts: 369
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diceman,
Thank you for your reply.
I am charting TRE and when I draw trend lines, so far I am geting a more accurate representation with arithmetic vs. log charts.
My bottom line question is, which format is better for drawing trend lines?
Thank you.
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Registered User
Joined: 1/28/2005
Posts: 6,049
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amberpax
My guess is the log scale would be more accurate because it is equal in percent.
Between the two the arithmetic scale is the one that "can" create distortion.
I don't know how it started but my guess is the distortion possible in the arithmetic
scale is the reason software programs started offering log scales.
(this goes back to the days of log graph paper)
I know some traders who only use the arithmetic scale because they can see
the price better. (it will move in 50 cent, 1 dollar increments and so on)
Some others like the log scale and only "switch" to the arithmetic when they
need to look at exact price.(for a stop or breakout and so on)
I guess the bottom line is you will have to choose based on your trading style.
Just be aware that arithmetic can create distortion and changing styles after a trend
line is drawn can create problems.
Thanks
Good Luck
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