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Strategies & Market Trends : TA setups-ex th traders -- Ignore unavailable to you. Want to Upgrade?

To: Henry J Costanzo who wrote (6452)	4/8/2005 4:15:36 PM
From: Galirayo	Read Replies (1) \| Respond to of 7682

Well MC .. Just because I carry a post from this thread to another you could at least post to the correct person. That said .. I also prefer the Arithmetic Scale. Ray See Below. stockcharts.com [Snip] Will the Real Trendline Please Stand up? Now I would like to touch on price scales and trendlines. Underneath "price plot attributes" in SharpCharts, there is a choice between semi-log and linear scaling. A semi-log scale displays the price scale based on percentages. If the scale goes from 20 to 200, the distance between 50 and 100 would be the same as the distance between 100 and 200. A move from 50 to 100 equals +100% and a move from 100 to 200 equals +100%. On a linear or arithmetic scale, the distance between 50 and 100 would be equal to the distance between 100 and 150. Both distances are 50 points and would be represented equally. Whereas you would have three equal scale sections (50 to 100. 100 to 150 and 150 to 200) on a linear scale, you would have only two (50 to 100 and 100 to 200) on a semi-log scale. The Nasdaq Composite chart illustrates the difference scaling can make. On the arithmetic scale, the distance between 2500 and 3000 is the same as between 3500 and 4000. However, on the semi-log scale the distance between 2500 and 3000 is greater than the distance between 3500 and 4000. The trendlines extending down from early September are also different. The arithmetic shows three distinct touches and a breakout with the gap up on 17-Jan. The semi-log trendline shows two touches and a breakout two days later on the 19th. The choice of scale varies among traders and analysts. In general, I believe that many short-term traders prefer arithmetic scales and long-term investors prefer semi-log scales. While neither is necessarily better or worse than the other, the choice of scaling will affect trendline angles and breakouts. The angle of a trendline on a semi-log scale reflects the percentage rate-of-change for a security. The angle of a trendline on a linear scale reflects the absolute rate-of-change. Probably the best question would be: do traders and investors based their returns on absolutes or percentages? Would you look to take a profit based on a 10-point advance or a 10% advance? Borrowed From Here. stockcharts.com