Logarithmic price scale (better known as Log Scale), is useful for viewing the longer-term/bigger picture of an asset.
Day traders will prefer linear charts.
Over the longer term, price changes on a linear chart can be distorted.
Log charts focus on percentage changes and can provide an overview of exponential growth for an asset.
Both Log and Linear have their benefits.
For example, if a stock starts at $10 and hits $100 two years later, the linear chart will make the move up look parabolic because it started at $1, and Linear Charts focus on the difference in price on the axis.
Logarithmic price scale (better known as Log Scale), is useful for viewing the longer-term/bigger picture of an asset.
Day traders will prefer linear charts.
Over the longer term, price changes on a linear chart can be distorted.
Log charts focus on percentage changes and can provide an overview of exponential growth for an asset.
Both Log and Linear have their benefits.
For example, if a stock starts at $10 and hits $100 two years later, the linear chart will make the move up look parabolic because it started at $1, and Linear Charts focus on the difference in price on the axis.
Log Charts focusing on the difference in percentage on the axis will display the same chart in a different manner.
Elliot Wave Counts can be done on Log Scale for a long term count.
That being said, it is best to use both charts for any analysis, as you may find a different confluence that presents a setup not found on the other.
Key Points of the Lesson
UTILITY
Useful to analyze data on extremely volatile assets with high percentage price moves.
Analyze old price data (years).
Acquire a high time frame perspective (on a volatile asset).
IMPLEMENTATION
Zoom out to HTF ⇒ click “log”.
Click “ Fib levels based on log scale” for tools such as the Fibonacci retracement.
PRACTICAL EXAMPLE
TIPS & TRICKS
Log scale is NOT recommended for day trading
Looking at an asset with a better perspective can provide you with a better trade.
Checking log scale vs. normal can be helpful.
TAKE HOME MESSAGE
Examine historical data.
Extremely volatile assets.
Acquire a high time frame perspective.