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How are log charts different from linear charts?


Asked by Yahir Esparza on Nov 30, 2021 FAQ



The chart on the left is a log chart of Tesla and the chart on the right is a linear price chart of Tesla . Log charts show the percentage change difference between prices while a normal linear chart shows a fixed distance between prices. Take one more look at both charts above.
Keeping this in consideration,
The Difference Between Linear and Logarithmic Charts. On a linear chart, each unit change is treated exactly the same. The change from $1 to $2 looks the same from $10 to $11. On a logarithmic chart, each percentage change is treated the same. Linear charts become useful when you want to see the pure price changes with scaling calculations.
In this manner, The scale below is linear and the difference between 120 to 140 is the same as 320 to 340: What is a log scale chart? A logarithmic scale, often called a log scale, shows the percentage (relative) change.
Just so,
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.
Thereof,
The only difference is one chart is a log chart and the other is a normal linear price chart. That's why they look different. Understanding log charts and normal linear charts is an important skill for all traders and investors. Especially when looking at price changes over long periods of time.