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Author Topic: logarithmic charts why?  (Read 2053 times)
unbuttered_toast
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June 12, 2011, 05:19:44 AM
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Why're all the Bitcoin/USD charts logarithmic? There's a cynical (and ignorant) part of me that keeps wanting to think "because it makes the lines look friendlier". What's the real reason?
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mellowhead
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June 12, 2011, 05:21:14 AM
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I'm no analyst, but I'd say it's to make it easier to identify huge diversions from the norm.

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June 12, 2011, 05:40:10 AM
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A logarithmic scale makes large numbers look the same size as small numbers. I don't think that'd do what you just wrote.
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June 12, 2011, 05:42:19 AM
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A logarithmic scale makes large numbers look the same size as small numbers. I don't think that'd do what you just wrote.
Example chart?

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mellowhead
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June 12, 2011, 05:46:03 AM
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A logarithmic scale makes large numbers look the same size as small numbers. I don't think that'd do what you just wrote.

For certain analysis, I can imagine one would prefer to have the large numbers appear to be of a similar scale to small numbers. For example, to compare deviation from an average at a low volume/price/whatever to a much higher volume/price/whatever.

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June 12, 2011, 05:52:55 AM
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That makes sense. This is the kind of context I was thinking of: http://forum.bitcoin.org/index.php?topic=15509.msg205384#msg205384
mellowhead
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June 12, 2011, 05:57:52 AM
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That makes sense. This is the kind of context I was thinking of: http://forum.bitcoin.org/index.php?topic=15509.msg205384#msg205384

Perfect example of what I was just talking about as well. You can clearly see the deviations from the mean whereas if the chart were not logarithmic, it would be much more difficult to (a) place the median line in the first place, and (b) identify the deviations from it.

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detroit
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June 12, 2011, 06:19:36 AM
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Regrettably, the chart linked isn't logarithmic. 
I don't understand why they're used for this application, either.

Let's all discuss it amongst our noob selves.

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June 12, 2011, 06:30:51 AM
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Regrettably, the chart linked isn't logarithmic. 
I don't understand why they're used for this application, either.

Let's all discuss it amongst our noob selves.

I believe the right-hand scale is logarithmic. I'm now posting using my smartphone now, so I can't quite see the right edge anymore. If it's not precisely logarithmic, it's a close enough approximation to demonstrate the idea.

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detroit
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June 12, 2011, 06:51:31 AM
 #10

Ah!  I see where you're coming from, but I'm on a PC and still can't see the right hand scale.
Nonetheless, I shall keep an open mind.  But I don't understand why commodity price should vary logarithmically.
Whatever, I'm still many posts away from being able to do anything much here.  I'm going to go try out http://www.bitcoinforums.net/index.php

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ribuck
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June 12, 2011, 07:01:43 AM
 #11

If you buy $1000 worth of Bitcoins at 50 cents each and sell them later for 75 cents each, you make exactly the same profit as if you buy $1000 worth of Bitcoins at $5 each and sell them later for $7.50 each.

The logarithmic price scale makes both of these events (a rise from 50 to 75 cents, and a rise from $5 to $7.50) look similar.

Without a logarithmic scale, a rise from $25.50 to $25.75 would look as significant as a rise from 50c to 75c.
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June 12, 2011, 07:18:09 AM
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If you buy $1000 worth of Bitcoins at 50 cents each and sell them later for 75 cents each, you make exactly the same profit as if you buy $1000 worth of Bitcoins at $5 each and sell them later for $7.50 each.

The logarithmic price scale makes both of these events (a rise from 50 to 75 cents, and a rise from $5 to $7.50) look similar.

Without a logarithmic scale, a rise from $25.50 to $25.75 would look as significant as a rise from 50c to 75c.
^ ^ That too. Thanks ribuck.

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June 12, 2011, 01:23:43 PM
 #13

Ah!  Look, there's actually useful information here in the n00b forum!  Thanks.

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June 12, 2011, 01:48:52 PM
 #14

If you buy $1000 worth of Bitcoins at 50 cents each and sell them later for 75 cents each, you make exactly the same profit as if you buy $1000 worth of Bitcoins at $5 each and sell them later for $7.50 each.

The logarithmic price scale makes both of these events (a rise from 50 to 75 cents, and a rise from $5 to $7.50) look similar.

Without a logarithmic scale, a rise from $25.50 to $25.75 would look as significant as a rise from 50c to 75c.

To put this into math terms, a constant exponential increase will look linear on a log graph.
virtualripple
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April 27, 2013, 04:08:58 PM
 #15

Math? Because what is important is relative gain (in %) not absolute.
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April 27, 2013, 09:13:10 PM
 #16

It's more fun to show new initiates a log chart and then switch to the linear one.
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April 27, 2013, 09:23:50 PM
 #17

Because moving from 1 to 2 is like from 100 to 200, a 100% increase.
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