LOG vs LINEAR Charting!
This is the most important thing especially if you are analysing long term charts!š§
So, let's get this right today!
Letās goš§µ...
1⣠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...
2⣠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...
3⣠But, I don't see any problem?š¤
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...
4⣠What else?š§
- 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)? š¤
All this is because of the equally spaced Y-axis!
hmmm... okš