Ticker&TapeLog vs linear scale on stock charts
The price axis on a chart can be drawn two ways. Picking the right one changes how a stock's history looks, and how you judge its moves.
Linear scale
On a linear scale, every dollar takes the same vertical space. The distance from $10 to $20 looks exactly as tall as the distance from $100 to $110.
That sounds fair, but it hides something important. Going from $10 to $20 doubles your money: a 100% gain. Going from $100 to $110 is only 10%. On a linear chart, a stock that ran from $10 to $200 over several years looks flat for a long time and then shoots straight up at the end.
Log scale
On a logarithmic (log) scale, equal percentage moves take the same vertical space. A move from $10 to $20 (+100%) looks exactly as tall as a move from $100 to $200 (+100%). Every doubling is the same height.
Why percentages are what matter
As a trader you think in percentages. You risk 7% on a stop, you aim for gains of 20% to 25%, and a base that is 30% deep is judged by its percentage, not its dollar depth. A $5 drop is a disaster for a $20 stock and a rounding error for a $500 stock.
A log chart shows those moves honestly across a stock's whole history, so a base from three years ago and today's base can be compared fairly.
When to use each
- Log scale: weekly and long-term charts, stocks that have moved a lot, comparing bases over time. This is the standard for growth-stock analysis.
- Linear scale: short-term daily charts over a few months, where the price range is narrow. Here both scales look almost identical.
- Trendlines can look different on each scale. A line that holds on log may break on linear, so draw them on the scale you actually use. See trendlines.
Reading a log chart in practice
On a log chart, a steady uptrend where the stock gains a similar percentage each month looks like a straight line, while on linear it curves sharply upward. If a log chart starts to bend upward, the stock is truly accelerating; if it flattens, momentum is fading even though dollar gains may still look large.
On Ticker&Tape you can switch the price axis between log and linear on any chart. Try both on a stock that has risen a lot over five years and notice how different the early years look.
Common mistakes
- Judging a long-term chart on linear scale and thinking a stock went parabolic only recently.
- Comparing the size of old and new bases on a linear chart.
- Drawing a trendline on one scale and watching for breaks on the other.
Key points
- Linear scale gives every dollar the same height; log scale gives every percentage the same height.
- Traders think in percentages, so log scale tells the truer story.
- Use log scale for weekly and long-term charts; on short daily charts the difference is small.
Check what you learned
Answer at least 2 of 3 correctly to complete the lesson.
1. On a log scale, which two moves look exactly the same height?
A log scale gives equal percentage moves the same height. Both $10 to $20 and $100 to $200 are gains of 100%.
2. Why is log scale the standard for growth-stock analysis?
Stops, profit targets and base depths are all judged in percentages, so a scale built on percentages tells the truer story.
3. A stock rose from $10 to $200 over several years. How does that usually look on a linear chart?
On linear, every dollar takes the same space, so early 100% gains look tiny and late dollar moves look huge.
Open a weekly chart → Try it on Ticker&Tape