/biz/ - Business & Finance

[Anonymous No.8530612]

Arithmetic vs Log charts

Which one's better /biz/?

[Anonymous No.8530878]

>>8530612
log if you are using alonger time scale, because you don't have to redraw trendlines as often.

"In the case of Amazon.com (AMZN), there were two false breaks above the downtrend line as the stock declined during 2000 and 2001. These false breakouts could have led to premature buying as the stock continued to decline after each one. The stock lost 60% of its value three times over a two-year period. The semi-log scale reflects the percentage loss evenly, and the downtrend line was never broken. "
Pic related
http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:trend_lines

[Anonymous No.8530920]

>>8530612
Log for any time scale. It takes into account the inherently exponential increase in value of any asset due to inflation of currency.

The only reason linear works on a shorter time scale is that a linear scale approximates a log scale for small deviations.

[Anonymous No.8531123]

>>8530612
Log scale is for real analysis. Shows you percentage increase, easier to see when the price goes up or down in percent values. Read up on decibel scale because log scale is decibels which is a fancy way to call ratio and percent changes. Linear scale is mostly useless. Log scale is what you have to use when values change frequently and by a lot. As everything worth doing it will take time and effort to learn.

[Anonymous No.8531143]

you can only use log if youre looking to actually invest, and when you zoom in, theyre both the same anyway

[Anonymous No.8531177]

>>8530612
log is for long term, day traders almost never use it

[Anonymous No.8531232]

>>8531177
Day traders are gamblers rather than investors, so that makes sense.