The psychology effect of percentages

[Joohansson]

Any experienced trader know this and probably most other traders as well but I'm bored so I bring this up anyway
Maybe 1 or 2 newbies can learn from this..

Measuring price changes in % is a bit messy. I't very easy to understand when something go up 100% it's a doubling and 1000% is equal to 10 times original price. When the price go down it's a bit different. Down 50% means half original price and down 100% means zero. It can never go down more than 100% in one go. The interesting thing is in order to recover from 50% loss you need 100% gain. In other words when the price go up and recover it's ALWAYS higher %-number than when it went down. That has a psychological effect you seldom reflect over. High number up feels good, low number down feels less bad. It also matters how much it go down. Minus 10% means you have to recover 11.1% but minus 90% means the price have to recover 1000% from the bottom! For a single trading pair it doesn't matter much, price go up and down with same speed, it's just in your mind..

One place it matters though would be a list of altcoins and you try to compare up% with down% and come to the conclusion that coins are moving more up than down as a whole, that is probably very wrong!

[Xavofat]

True.  Also, if cryptocurrency X goes up by 50% from $100 but you bought it for $50 originally, that is not a 50% gain for you bought a 100% gain on your initial investment.

Compounding is key to significant gains in this sense.

Ignoring effects like this severely damages most new traders' judgement, especially when handling small amounts or dealing with shitcoins.

[EXtremeAEX]

Yup, sometimes you see coins with more than 100% increase and that catches your attention, but it can be those altcoins that a re worth only a few satoshis. That is why I keep away from percentages too, and I only see the current values, the profits and losses for each coin.

The overall percentage change can still be useful to give you an idea of how much it had changed from the original buy price though.

[capoeira]

on a sidenote:
I always wanted to se a logarithmic chart where 100% rise has always the same "distance"; think that would be binary logarithm. Just out of interest if this would be any usable. On the downmove it would need another logarithm.

[mindrust]

on a sidenote:
I always wanted to se a logarithmic chart where 100% rise has always the same "distance"; think that would be binary logarithm. Just out of interest if this would be any usable. On the downmove it would need another logarithm.

Are you looking for this?
https://bitcoincharts.com/charts/bitstampUSD#tgSzm1g10zm2g25zvzl

There are many logarithmic charts out there for almost everything. For hash rates, prices, difficulty changes, you name it.

Or try this;
https://www.tradingview.com/chart/

You can make a log chart of almost pair. Log is under chart properties.