Why do I mostly use “Logarithmic
(Log) Charts”? The standard
chart type (Linear Charts), on which a given distance always represents the same
absolute change in price (unlike on a logarithmic chart, where a given distance
always represents the same percentage change in price). In other words, the
distance from 1 to 10 is the same as the distance from 10 to 100 on a
logarithmic chart, but the latter distance is ten times greater on a linear
chart. Let’s compare.
Unlike day traders who mostly look
at short time periods 5, 15, 30, hour charts. Log charts do them no good
since time period is too short to matter. I look at longer time periods
for bigger percentage moves in my investments. Which greatly reduces my trading
fee's which boosts my total yearly returns. Log Charts give me and institutions
a much clearer picture of possible total percentage returns on investment. This
does not mean I will not take profits intraday or in a 2 to 3 day period to
reduce risk and pocket some gains.
Longer time period weekly Charts are
more powerful and greatly reduce erratic intraday price action. This does not
mean you cannot drill into shorter time periods to fine tune an entry or exit
in a position.
No comments:
Post a Comment