Ask Colin

Is there a reason why you mostly use semi-log scaled charts, or is it simply a personal preference?

Semi-log scaled charts are the charts of choice for all serious technical analysts. They are the only correct charts on which to draw trend lines. The main consideration is the degree of change of price over the period of the chart. If it is at all significant, a semi-log chart is really mandatory.

The reasoning behind using them is that the semi-log scaling allows comparison of price action from one part of the chart to the other. It also assists comparison of charts of differing stocks. Remember that our concern should be to make a percentage return on capital. It is wise not to lose sight of this when looking at the charts. With linear scaling, proper comparisons of opportunities are difficult.

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