Linear or Logarithmic?
When studying charts and mapping out trendlines, there can be a significant difference between linear and logarithmic charts. Is one better than the other?
It seems to me that they have different uses. Linear charts use a constant scale for increasing values on the vertical axis, and might be more useful for short-term, or range-confined situations. Logarithmic charts decrease the scale as values increase to better take into account increase by percentage. For longer term charts that involve larger moves, logarithmic charts may be more appropriate.
I tend to use logarithmic most of the time. Periodically, I flip over to linear to see what kind of difference it might make. In the case of USSIF, it paints a very different picture these days. USSIF is flirting with breaking a rising trendline. A clear of break of the trendline is my signal to get out, so it’s important that I draw that line the correctly. On the Logarithmic chart, it looks like support has been broken:
When I flip over to a Linear view, USSIF remains on support…
In terms of consistently locating support, the Linear trendline seems to have a better bead on the price action for USSIF in this situation. I will hold out to see if this Linear trendline holds before selling my position.