Log Scale

[Go Back]

Changing Chart Scales

The Log Scale option changes the price axis on your chart to a logarithmic scale. In a logarithmic scale, each unit of distance reflects an equal percentage change. That is, percentage gains take up the same amount of vertical distance. For example, the distance between 20 to 40 and 40 to 80 would be shown to have the same amount of spacing, because each change is a 100 percent increase.

Charts are sometimes called "semi-logarithmic" when only one axis is using a logarithmic scale, such as a logarithmic price axis with a normal time axis.

Semi-logarithmic scaling allows traders to compare percentage price changes rather than absolute price changes. This presents a uniform view of performance and makes it easier to compare securities that are very different in absolute price figure. Hence, traders use this scale when there is a wide range of prices, and when the significance of a change in the prices depends not on the absolute size of the change but on the proportion of the change.

Although this type of chart is very useful when comparing securities with very different price values, it is not useful if the securities report negative price values. For practical purposes, negative numbers are not plotted on logarithmic graphs.