Even the biggest handles with 100k+ followers get this simple thing wrong in charting!π€¦ββοΈ
This is the most important thing especially if you are analysing long term charts!π§
So, let's get this right today!
USE LOG CHARTS π FOR ANALYSING LONG TERM CHARTS!
Letβs goπ§΅...
This is the most important thing especially if you are analysing long term charts!π§
So, let's get this right today!
USE LOG CHARTS π FOR ANALYSING LONG TERM CHARTS!
Letβs goπ§΅...
1β£ Wait, What's Log chart?
Before I define Log chart, let's look at the chart you are using daily - 'The Linear Chart'
- Linear chart is used by default in most platforms. This is probably why you never knew log charts
Wait, don't click on 'log' yet before you understand it...
Before I define Log chart, let's look at the chart you are using daily - 'The Linear Chart'
- Linear chart is used by default in most platforms. This is probably why you never knew log charts
Wait, don't click on 'log' yet before you understand it...
2β£ ok, so what does Linear chart mean?
Take a look at the image
- The y-axis is separated equally by 1000 points starting from 0 to 11000.
- So, any linear chart would have its y-axis equally separated by 'N' points always
And... that's where the problem lies...
Take a look at the image
- The y-axis is separated equally by 1000 points starting from 0 to 11000.
- So, any linear chart would have its y-axis equally separated by 'N' points always
And... that's where the problem lies...
3β£ But, I don't see any problem?π€
Ok ok.. let me explain...
- Can you look at this #TATAELXSI chart & tell me the price in '99 when it was listed? No!
- Can you draw a proper trendline in this chart? No!
Reason is because of the price congestion between '07 to '20...
Ok ok.. let me explain...
- Can you look at this #TATAELXSI chart & tell me the price in '99 when it was listed? No!
- Can you draw a proper trendline in this chart? No!
Reason is because of the price congestion between '07 to '20...
4β£ What else?π§
- Whenever there is a price change in an instrument & it's drastic it'd be difficult to analyse on a linear chart
- Look at this example of #BTCUSD. What happened in 2021(refer to the red box)? π€
All this is because of the equally spaced Y-axis!
hmmm... okπ
- Whenever there is a price change in an instrument & it's drastic it'd be difficult to analyse on a linear chart
- Look at this example of #BTCUSD. What happened in 2021(refer to the red box)? π€
All this is because of the equally spaced Y-axis!
hmmm... okπ
5β£ Let's talk about our hero - 'The Log Chart' π¦ΈββοΈ
Let's click on log first (refer chart)...
Do you see the change in the same #TATAELXSI chart? π(Reason in chart)
Yes, but what do you see?..
There you go!
- Price trend visible clearly
- You can identify trends since listing
Let's click on log first (refer chart)...
Do you see the change in the same #TATAELXSI chart? π(Reason in chart)
Yes, but what do you see?..
There you go!
- Price trend visible clearly
- You can identify trends since listing
6β£ Here's a side-by-side comparison
- Basically a log scale considers the 'Percentage' price change in the Y-axis which makes a huge difference especially where prices have moved dramatically
- This dramatic price change could have happened in just a month or over many years
- Basically a log scale considers the 'Percentage' price change in the Y-axis which makes a huge difference especially where prices have moved dramatically
- This dramatic price change could have happened in just a month or over many years
7β£ Ok, so when to use log/linear scale
- See, in the short term charts log/linear scale don't make a difference (Refer chat)
- If you're purely an intraday or a short term trader, then you can continue to use linear charts
But, if price moves drastically(crypto) then use log...
- See, in the short term charts log/linear scale don't make a difference (Refer chat)
- If you're purely an intraday or a short term trader, then you can continue to use linear charts
But, if price moves drastically(crypto) then use log...
8β£ But, I am a long term investor + swing/positional trader?
Yes, then you ought to switch to 'Log chart' FOREVER so that...
- You can analyse charts properly
- Draw clean trendlines
- Identify primary trendline/channel reversals
Short term charts should be just fine with log!
Yes, then you ought to switch to 'Log chart' FOREVER so that...
- You can analyse charts properly
- Draw clean trendlines
- Identify primary trendline/channel reversals
Short term charts should be just fine with log!
9β£ So, the next time you see a big handle analysing a long term chart with 'Linear chart' like this on #twitter π€¦ββοΈshare this thread on that tweet and kill itπͺ
And, yes switch to 'Log' now...π«‘
And, yes switch to 'Log' now...π«‘
π Learnt something? If yes, pleaseπ
1. Retweet the first tweet
2. Follow @dmdsplyinvestor
3. Subscribe to my YouTube channel for more content! youtube.com
1. Retweet the first tweet
2. Follow @dmdsplyinvestor
3. Subscribe to my YouTube channel for more content! youtube.com
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