logarithmic charts why?

[unbuttered_toast]

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?

[1714149249]

1714149249

[mellowhead]

I'm no analyst, but I'd say it's to make it easier to identify huge diversions from the norm.

[unbuttered_toast]

A logarithmic scale makes large numbers look the same size as small numbers. I don't think that'd do what you just wrote.

[dank]

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?

[mellowhead]

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.

[unbuttered_toast]

That makes sense. This is the kind of context I was thinking of: http://forum.bitcoin.org/index.php?topic=15509.msg205384#msg205384

[mellowhead]

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.

[detroit]

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.

[mellowhead]

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.

[detroit]

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

[ribuck]

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.

[mellowhead]

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.

[detroit]

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

[tysat]

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]

Math? Because what is important is relative gain (in %) not absolute.

[Manawarp]

It's more fun to show new initiates a log chart and then switch to the linear one.

[Gabi]

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