Question Of The Week - 9/19/2005

Ideally, all charts should be plotted logarithmically, but many chart services do not provide this option, plus plotting logarithmic charts by hand can be difficult and time-consuming. In the real world, you should save logarithmic plots for wave patterns that cover a large price range. A large price range would be defined by the percentage (%) difference between the highest and lowest price on your chart. If the top price is more than twice the value of the bottom price, a logarithmic chart is best for proper wave counts and accurate channeling. The greater the percentage difference between the top and bottom price level, the greater the importance of employing a logarithmic scale. On the other hand, for day-to-day wave counts and channeling, an arithmetic chart works fine.