trend lines

Discussion in 'Technical Analysis' started by misterkel, Feb 7, 2018.

  1. Trying to set trendlines in very highly moving instrument - Is it better to use log scale or standard scale? I'm looking for reversal confirmation - ie, breakthrough after pullback from bottom.
     
  2. qxr1011

    qxr1011

    does not matter

    if you looking for answers to such basic question as above I suggest not to trade real money regardless if you will find those formations or not
     
    speedo likes this.



  3. It depends on starting price and percentage move, whether a log makes more sense over a standard scale.

    A $2 swing on a $20 stock is a head-turner.
    A $2 swing on APPL, less so.
     
  4. tomorton

    tomorton

    Log scale only aids analysis over multi-year charts with high percentage price changes.

    If the chart doesn't make sense within the terms of your strategy, you can't juggle the chart to make it fit. That would be like driving the car with your eyes shut and taking left and right turns where you'd like the road to go.
     
    SunTrader, comagnum and Xela like this.
  5. Right, I understand that it makes more sense with high percentage changes - and that's my point. I'm looking at ETH, which has moved from $1000 to $580 and back up.
    So - huge % moves, very short time frame.
    I guess I don't understand your analogy, since I'm not trying to fit it to my preference - I'm trying to determine which will give me more accurate results in market terms.
    Go with standard, since short time frame - or go with log, since huge moves?

    I kind of doubt if TA works in cryptos, but it's just a study for now.
     
  6. Looking at some cryptos in the higher range - ETH mainly. So $250 move on $800 instrument.
    I'm assuming log scale works better for that, but I haven't studied the difference in application for the two scales.
     
  7. tomorton

    tomorton


    Long-term TA - log charts can make more sense as they print equivalent vertical movements of price according to % change, rather than points or pips change. So a 100pt to 150pts would be the same vertical distance as 200pts to 300pts: same change in % but twice as much in pts.

    If price is rising at a steady % rate per year, the price line on the log chart would be a straight upward slope: whereas without the log scale, the line would curve up over recent times and fool the viewer into thinking that the rate of price rise was increasing.
     
    tommcginnis likes this.
  8. So what about the short term?
     
  9. I bought ETH @ 256 ..sold it @756... went up to 1500/// waited for it get below 700, now back in ETH. This time holding onto it.

    As for as trendlines, they just point out statistical oultiers, only use the standard. I don't have experience with log.
     
  10. What's your logic for this being the bottom? I keep seeing countertrend moves to the upside, then big knifes down - been happening for a week now.
     
    #10     Feb 7, 2018