Logarithmic Price Scale
Categories: Metrics
If you look up a stock chart on Google, you’ll like see a linear scale. On the x-axis, you've got time. On the y-axis you've got price. And each tick on that y-axis represents the same dollar amount. It goes up steadily in regular dollar increments.
A logarithmic scale uses a different setup on the y-axis. Each mark represents a percentage change. So, rather than a fixed dollar scale, the y-axis measures the percentage move the stock achieved in a given period.
A dollar-sized move in stock price means different things depending on the current price of the stock. A $2 stock rises a buck to $3...that’s a 50% move. Epic jump. A $100 stock rises a buck...just 1%. A yawn-inducing day. The logarithmic scale takes this dynamic into account.