Ask a hundred traders whether you should be using Log charts or Linear charts and you will get as many answers. The real answer seems to boil down to - Look at both and find what works.
On the lower time frames there is often not a big difference. Log is often considered best for longer-term charting, but that is not an absolute.
@Badrosha on twitter writes: twitter.com/CryptoBa...s/986138441330151425
You can test the difference between Linear and Log for yourself. Try these ideas to see if you notice any differences:
->First, you got to use " Magnet Mode " (symbol of a magnet on low left of options on left side of your chart) picking your two or three points of a trend using a " Ray" (a straight line). On magnet mode the line will go to the top of a candle body or wick for you.
>Second, start to shuffle between the log and linear to find the story they are telling.
-LOG charts are generally considered to be better in a parabolic rally. It will be easier to see whether its Bullish or Bearish
-Linear is often considered best for ENTRIES because it can potentially show Down Trend breakouts, short swing trade set ups, and pattern breakouts before the log chart will.
-Log is often considered best EXITs and long term charting. Log shows Up Trend breakouts, long swing expiration = short entry, higher and prior to linear.
>With Linear you can see classic entries in breakouts, which is the confirmation on a broken trend. While with log, you rarely find one and actually if price action starts to return on a breakout, the breakout will likely invalidate and go deeper - unless in "parabola."
The bottom line: there is not a "right" answer. What matters is not whether one is right philosophically or intellectually, it matters what Works. Look at the history of a chart and look at what has worked, because one of the tenants of Technical Analysis is "History Repeats Itself."
On the daily chart of BTC right now, there is a potentially important difference between Log and Linear charts. The red resistance is the Log resistance for the current bearish trend, while the blue resistance is the linear resistance for the current bearish trend. This difference is why a lot of traders disagree right now on whether we are in a continuation of the bearish trend, or the start of a new, potentially bullish, trend.
Ari Wald, CFA, CMT Analyst Wolfe Research @AriWald
For me, I’m a Log-always analyst. While the differences are many times negligible, there are times that Log scaling provides a considerably stronger view of the stock’s trend vs. Arithmetic scaling, but I’ve never found the opposite to be true. The advantage of Log is clearly seen at long-term horizons or during big price moves at lower prices.
As an extreme example, drawing a trendline on an arithmetic chart of the S&P 500 from 1930-current is not an accurate depiction of the index’s trend during that period in my view. We realize that a 10 point move from 20 to 30 (50%) is not the same as a 10 point move from 30 to 40 (33%). A line on a log chart would look like a curve plotted on an arithmetic scale in this example – but consider that the price on this arithmetic scale gives an inaccurate view of price, in my opinion, and therefore the curved trendline is justified.
So overall, if I’m going to use a Log chart in this situation I should maintain my defaults on Log because I won’t encounter a time when I’m at a disadvantage, only times when Log is preferred.
Peter L Brandt – CEO Factor LLC @PeterLBrandt
As a trader I do not use log charts. However, I can see some advantages to log charts for analysts who exam very very long-term trends.
The reason I do not use log charts is that they are irrelevant to me as a futures trader. The value of a $15 move in the S&P was the same to me when S&Ps traded $150 as it is today when the S&Ps are at 1700 or so, even though on a percentage basis the $15 change was 10% of the price in 1983 and less than 1% of the index today.
On the lower time frames there is often not a big difference. Log is often considered best for longer-term charting, but that is not an absolute.
@Badrosha on twitter writes: twitter.com/CryptoBa...s/986138441330151425
You can test the difference between Linear and Log for yourself. Try these ideas to see if you notice any differences:
->First, you got to use " Magnet Mode " (symbol of a magnet on low left of options on left side of your chart) picking your two or three points of a trend using a " Ray" (a straight line). On magnet mode the line will go to the top of a candle body or wick for you.
>Second, start to shuffle between the log and linear to find the story they are telling.
-LOG charts are generally considered to be better in a parabolic rally. It will be easier to see whether its Bullish or Bearish
-Linear is often considered best for ENTRIES because it can potentially show Down Trend breakouts, short swing trade set ups, and pattern breakouts before the log chart will.
-Log is often considered best EXITs and long term charting. Log shows Up Trend breakouts, long swing expiration = short entry, higher and prior to linear.
>With Linear you can see classic entries in breakouts, which is the confirmation on a broken trend. While with log, you rarely find one and actually if price action starts to return on a breakout, the breakout will likely invalidate and go deeper - unless in "parabola."
The bottom line: there is not a "right" answer. What matters is not whether one is right philosophically or intellectually, it matters what Works. Look at the history of a chart and look at what has worked, because one of the tenants of Technical Analysis is "History Repeats Itself."
On the daily chart of BTC right now, there is a potentially important difference between Log and Linear charts. The red resistance is the Log resistance for the current bearish trend, while the blue resistance is the linear resistance for the current bearish trend. This difference is why a lot of traders disagree right now on whether we are in a continuation of the bearish trend, or the start of a new, potentially bullish, trend.
Ari Wald, CFA, CMT Analyst Wolfe Research @AriWald
For me, I’m a Log-always analyst. While the differences are many times negligible, there are times that Log scaling provides a considerably stronger view of the stock’s trend vs. Arithmetic scaling, but I’ve never found the opposite to be true. The advantage of Log is clearly seen at long-term horizons or during big price moves at lower prices.
As an extreme example, drawing a trendline on an arithmetic chart of the S&P 500 from 1930-current is not an accurate depiction of the index’s trend during that period in my view. We realize that a 10 point move from 20 to 30 (50%) is not the same as a 10 point move from 30 to 40 (33%). A line on a log chart would look like a curve plotted on an arithmetic scale in this example – but consider that the price on this arithmetic scale gives an inaccurate view of price, in my opinion, and therefore the curved trendline is justified.
So overall, if I’m going to use a Log chart in this situation I should maintain my defaults on Log because I won’t encounter a time when I’m at a disadvantage, only times when Log is preferred.
Peter L Brandt – CEO Factor LLC @PeterLBrandt
As a trader I do not use log charts. However, I can see some advantages to log charts for analysts who exam very very long-term trends.
The reason I do not use log charts is that they are irrelevant to me as a futures trader. The value of a $15 move in the S&P was the same to me when S&Ps traded $150 as it is today when the S&Ps are at 1700 or so, even though on a percentage basis the $15 change was 10% of the price in 1983 and less than 1% of the index today.
Comment:
Comment:
The two TV charts show how you can get different information by using a line on Log vs a line on Linear. When using the Magnet feature and a Ray you will see a more accurate picture by following the examples in the attachments from the message directly above this.