The first chart is bitcoin (in USD) using a linear chart: A linear chart shows the absolute movement, not the percentage (relative) movements.Īs you can see, the movements prior to 2017 are hardly noticeable. Let’s look at the difference between linear and logarithmic charts. For example, if you show a linear chart of bitcoin from 2015 until 2021, the chart gives an improper view of the “real” changes in the asset.Ī picture describes the differences much better: A visualization of linear vs. The main benefit is that you get a correct visualization of percentage moves, not absolute moves.
What is the benefit of logarithmic charting? The importance of using logarithmic scales grows as the time frame gets bigger. Obviously, a log scale is the correct one to use instead of a linear chart. We can conclude that a linear chart shows the absolute values/changes, while a logarithmic scale shows the relative changes. What is the difference between a linear and logarithmic chart? What is best? A rise from 120 to 140 is much bigger relatively than a rise from 320 to 340, even though both rise 20 points. Why does it change? Because the log scale shows the percentage changes (relative changes) – not absolute changes.
The distance between the lower numbers is higher than the upper numbers. If we change the linear scale from the pic above to log scale (logarithmic scale), the scale changes significantly: log scale vs linear scale If an asset rises from 50 to 60, a rise of 20%, it’s presented in the same way as a change from 10 000 to 12 000 (also a 20% rise). The scale below is linear and the difference between 120 to 140 is the same as 320 to 340: log chart vs linear What is a log scale chart?Ī logarithmic scale, often called a log scale, shows the percentage (relative) change. For example, a rise from 50 to 51 shows the same distance as from 100 to 101, even though the first one rises 2% and the latter rises only 1%. What is the best: logarithmic or linear charts and scale?Ī linear chart shows the same distance between the values on the y-axis.
Do you want monthly Trading Edges delivered to your mailbox?.What is the benefit of logarithmic charting?.What is the difference between a linear and logarithmic chart? What is best?.
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