It might be a setting, and it might be some other settings. You’ll notice on your chart, now on my chart is over on the lower right-hand corner, but in your chart, it might be something different. Here what I have is apple, and this is a basic chart of apple here on the monthly, if we go into the daily right here, this is a little bit more of a shorter term view. Let’s take a look at the charts as some example here. I do see at logarithmic charts from time to time if a stock chart is explosive and it’s necessary. The question is what do I watch? Well, typically I look at the arithmetic charts, more than 99% of the times.
Take a look at this visual right here, with the arithmetic and take a look at this with the logarithmic, and you see the difference here. Whereas the logarithmic charts or log charts stretch that scale, this is typically great for stock charts that are a little bit overextended or explosive, so that’s usually when you would use it. What are arithmetic charts? Well, arithmetic charts and also known as linear charts, which means the price values on the chart are the same distance or lengths just as you saw in that diagram. When should you use the logarithmic charts? That’s the difference between the arithmetic and the logarithmic version. The distance between six and seven gets tighter and tighter, and the distance between seven and eight gets even tighter.Īs we continue to move to the upper end, I didn’t even have space to put the numbers in there, but it starts getting closer and closer together. If we take a look at the logarithmic, you can see that as we go to the higher numbers, the distance between five and six starts to get smaller than the distance between one and two. Arithmetic scaleįirst, when we look at this arithmetic scale, you can see that everything is proportional between the number one and two, between the number two and three, the distance between those hash marks is the same all the way up to 13. And that will help illustrate a few things. So I want to share with you a visual here. This question refers to the type of charts that I use. So this week’s issue is, “When you evaluate stock charts, do you use logarithmic or linear arithmetic charts?” Hey, this is Sasha Evdakov, here from, here to answer a few of your investing and trading questions.
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