LOG or LINEAR - WHICH SHOULD WE USE?
- Thread starter Port1385
- Start date
This thread exemplifies precisely what is wrong with ET. A questioner comes in with a legitimate, honest question and he's as likely to get some smartass comment as a legitimate, honest answer.
In response to the OP, logarithmic charts may give you a better sense of actual returns. I tend to use log returns for trading signals and linear money for actual transactions, fwiw.
I use Log but it doesn't matter for daytrading. Log charts are best for long time charts. Weeklies, Monthlies. It scales the charts so that the moves are the same % wise.
http://www.fool.com/foolfaq/foolfaqcharts.htm
A log chart is useful when you are looking at a chart that contains a large price range which is typical of many long term charts or shorter term parabolic charts.
With a log chart you don't lose the details of past moves such as the chart of the Naz for example, where the details of the 1970's moves are lost on a linear chart yet still clear on a log chart.
With a log chart you don't lose the details of past moves such as the chart of the Naz for example, where the details of the 1970's moves are lost on a linear chart yet still clear on a log chart.
=======================
Usually the one which is easier on the eyes
usually log, if that is easier on the eyes.
-------------------------------------------------------
May also want to consider a PSAR[parabolic stop & reverse also],
if you like wise,
& like easy on the eyes.
PSAR is a bit slow,[even for a turtle, or a bear in winter] so i seldom use it without discretion.
======================================
Use 1 and stick to it. In all honesty I don't think there's a right answer.
Second best would be to use a natural chart until it makes severe moves...then adjust.
Second best would be to use a natural chart until it makes severe moves...then adjust.