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<font size=2 color="#993366"
face=Arial>Sounds good, I’m going to go with Log Scaling form now on;<span
> I use daily and 15-min charts and only about
250 days of data.
<font size=2 color="#993366"
face=Arial>
<font size=2 color="#993366"
face=Arial>Thanks again.
<font size=2 color="#993366"
face=Arial>
<font size=2 color=black
face=Tahoma>-----Original
Message-----
From: wavemechanic
[mailto:wd78@xxxxxxxxxxxx]
Sent: Friday, April 11, 2003 8:31
AM
To: Metastockusers@xxxxxxxxxxxxxxx
Subject: Re: [Metastockusers] Re:
Logarithmic Scaling/Arithmetic Scaling
<span
>
<font size=3 color=black
face="Times New Roman"> <font
color=black>
<font size=2 color=black
face=Arial>-----
Original Message ----- <span
>
<font size=2 color=black
face=Arial>
From:<font size=2 color=black
face=Arial> <a
href="" title="uhehs@xxxxxxxx">uhehs@xxxxxxxx
<font size=2 color=black
face=Arial>To:<span
> <a
href=""
title="Metastockusers@xxxxxxxxxxxxxxx">Metastockusers@xxxxxxxxxxxxxxx <font
size=2 color=black face=Arial>
<font size=2 color=black
face=Arial>Sent:<span
> Thursday, April 10,
2003 7:29 PM<span
>
<font size=2 color=black
face=Arial>Subject:<font size=2 color=black
face=Arial> RE:
[Metastockusers] Re: Logarithmic Scaling/Arithmetic Scaling<font
size=2 color=black face=Arial>
<font size=3 color=black
face="Times New Roman"> <font
color=black>
<span
class=EmailStyle19>Thank you Harold.
<span
class=EmailStyle19>
<span
class=EmailStyle19>Always something simple,
isn’t it?!
<span
class=EmailStyle19>
<span
class=EmailStyle19>I read that using
Logarithmic Scaling was the best option, what do you think?
<span
class=EmailStyle19> <font
color=black>
<font
size=2 color=black face=Arial>The following is a brief discussion of
log vs linear scaling. The general consensus is that linear is OK for
short times, but then log is used. Usually the cutoff is 1 year, and the
difference below 1 year is usually quite small.<font
color=black>
<font size=3
color=black face="Times New Roman"> <font
color=black>
<font
size=3 color=black face="Times New Roman">Logarithmic (Percentage) Scaling<span
class=EmailStyle19>
<font size=2 color=black
face=Arial>On a Logarithmic (Percentage) scale chart, the vertical
spacing between two points corresponds to the percentage change between those
numbers. Thus, on a log scale chart, the vertical distance between 10 and 20 (a
100% increase) is the same as the vertical distance between 50 and 100. Because
these charts show percentage relationships, logarithmic scaling is also called
"Percentage" scaling. It is also called "Semi-Log" scaling
because only one of the axes (the vertical one) is scaled logarithmically.
<font size=2 color=black
face=Arial>The other popular scaling option is Arithmetic scaling (AKA
linear scaling). On charts with large vertical ranges, technicians typically
use log scaling because it results in a truer picture of the price action.
<font size=2 color=black
face=Arial>Logarithmic scaling compresses the vertical axis on charts
with large vertical ranges. Compare the two charts below:
<font size=3 color=black
face="Times New Roman"><img
src="png00004.png"
v:src="png00004.png" v:shapes="_x0000_Mail" width=0
height=0 class=shape >
<img border=0 width=360 height=208
src="jpg00129.jpg" v:shapes="_x0000_i1025">
Arithmetic Scaling
<font size=3 color=black
face="Times New Roman"><img
src="png00005.png"
v:src="png00005.png" v:shapes="_x0000_Mail" width=0
height=0 class=shape >
<img border=0 width=360 height=208
src="jpg00130.jpg" v:shapes="_x0000_i1026">
Logarithmic Scaling
<span
>
<font size=2 color=black
face=Arial>Compare the period from 1994 to 1996 on the two IBM charts
above. On the arithmetic chart, things appears to be a very
quiet during that time period with the line increasing very gradually. On the
log scale chart things look very different - the price line rises dramatically
in the first two years. Given that the stock more than doubled during that
period, the arithmetic scale chart paints a very misleading picture of the
price action.
<font size=2 color=black
face=Arial>Similarly, compare the price action during the first half of
1999. On the arithmetic chart, this visually dramatic increase dominates the
entire chart. On the log scale chart, it is much less prominent. During that
time, the price rose from roughly 80 to roughly 140, an increase of 75%. While
that kind of increase is very nice, it is misleading to have that move visually
dominate a chart that shows an overall increase of roughly 1300%. Again, the
arithmetic chart leaves an inaccurate impression.
<font size=2 color=black
face=Arial>
<font size=3
color=black face="Times New Roman"> <font
color=black>
<font size=3 color=black
face="Times New Roman"><br
>
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