Logarithmic Scale Stock Chart
Where To Find and How To Use

A Logarithmic Scale stock chart refers to a type of chart that displays the distance between price movements along the y-axis in percentage terms as compared to a typical stock chart which uses an Arithmetic method.

The Arithmetic method displays the distance between price movements along the y-axis as the same spacing, no matter what the percentage movement is.

In other words, if using values of 10 through 200 for the y-axis in increments of 10, an Arithmetic stock chart would display each consecutive price level with the same spacing between them.

A Logarithmic stock chart would display the spacing between each consecutive price level going up with a smaller space between price levels.

Here's an example: the movement from 10 to 20 is a 100% gain and has moved from one price level to the next, but from 20 to 40 would also be a 100% gain yet the price has moved up two price levels.

If using a 1/4" space bewteen price levels is used as an example, an Arithmetic stock chart would display the move from 10 to 20 in a 1/4" spacing for a 100% gain, yet the move from 20 to 40 would take up a 1/2" spacing, also for a 100% gain.

A Logarithmic stock chart would display both the move from 10 to 20 and 20 to 40, each as 100% gains from each other and each over a 1/4" spacing. It displays spacing in terms of percentage movements.

Another way to think about these two types of charts is an Arithmetic stock chart displays the y-axis price movements in "absolute" terms and a Logarithmic scale stock chart displays the price movements in "relative" terms.

The first chart above is displaying a standard stock chart which is an Arithmetic stock chart. The second one is a Logarithmic stock chart.

In looking at these two charts, at first glance the tip off as to which is which, is that the standard stock chart has grid lines that are evenly spaced whereas the Logarithmic scale stock chart does not.

In some instances you'll find that trend lines seem to match up better on the Logarithmic stock chart. This may be due to traders and investors using "percentage" points as profit and stop loss targets rather than a specific unit number. This may be a benefit when looking for swing points for entrty and exits.

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Most charting programs have the option to display a Logarithmic scale if you look closely. A good place to look up stock charts is at StockCharts.com as I have used in my examples.

If you take a look at the image below, you'll see an option below the chart under "Chart Attributes" where you can check or uncheck the "Log Scale" option box. This will switch between the two types of charts when you click "update" after making your selection.

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