Post
Topic
Board Speculation
Re: Which graph is more useful and why?
by
BTC Economist
on 29/08/2011, 01:03:03 UTC
Here is why you need to use the log chart:

(d/dx) log x = dx / x

Now, what is dx / x.  Well that is the change in x over x.  If we move from continuous time (derivatives) to a discrete time interpretation, then it's analogous to  (x2 - x1) / x1 (ie. percentage change).  Log charts show percentage change.

Why percentage change?

Well, would you rather have your investment go from 5 to 10 or from 10 to 20?  Obviously they are both the same, you double your money.  A log chart would show a change from 5 to 10 to 20 as a straight line which is what you'd want.  A linear chart would make it look as if they price had grown exponentially.