When to Switch a Stock Chart to Log Scale

“Why does the chart look completely different on log?” The prices are identical. Only the unit of vertical distance changed. On a long chart, that unit changes the story.

What each scale measures

On a linear axis, equal vertical distances are equal dollar changes, so the gap from $10 to $20 takes up exactly as much height on the screen as the gap from $100 to $110, even though one is a doubling and the other is a modest gain.

On a log axis, equal vertical distances are equal percentage changes. Now $10 to $20 matches $100 to $200. Each is a doubling. Round-number labels bunch together toward the top of the axis, which is the quickest way to spot a log chart.

Two $10 moves, side by side

A linear chart says those moves were equal. For anyone who owned the stock, they were nothing alike. A holder who put $1,000 into the first move doubled it. The same $1,000 in the second move earned $100.

Use log for long periods and big moves

When a stock has risen from $5 to $150 over a decade, a linear chart crushes the early years into a flat line near the bottom and makes the recent years look like a cliff. The early moves may have been the biggest percentage gains of the run. They vanish. Log scale gives each year the height its percentage move earned.

It also treats losses honestly. A fall from $100 to $50 is a 50% loss, and the climb back from $50 to $100 is a 100% gain, which on a log axis are exactly the same height, so you can see at a glance that the stock has only returned to where it started even though the percentages quoted for the two legs sound very different.

A rough rule: if the chart covers several years, or the price has moved by more than a few multiples within the window, look at it in log. Index charts over long periods almost always read better that way.

Stay on linear for short windows

Short windows usually mean narrow ranges. A move from $48 to $52 is about 8%, and every dollar inside that band is worth close to the same percentage, so the two scales draw nearly the same picture. Linear is easier to read. Its labels are evenly spaced, and dollar distances match the stop and target levels traders actually use.

Intraday charts are usually read on linear for that reason. Short daily charts work fine on it too, unless the stock did something violent inside the window. How long a chart window should be in the first place depends on your holding period, which is the subject of choosing a chart timeframe from your holding period.

Trendlines move when the scale changes

A straight line on linear adds the same dollars each week. On log it adds the same percentage. Draw a line between the same two lows on each scale and project it forward, and the lines drift apart, slowly at first and then faster, because one is adding a fixed amount while the other compounds.

That means a trendline break on one scale may not exist on the other. Before acting on a break over a long chart, check it on both. See drawing a trendline that holds up for anchor points and a projection on both scales.

How to switch

Tools differ, but the option is usually in one of two places. Right-clicking the price axis often brings up a scale menu. Otherwise, look in the chart settings under the axis or scale section.

Some platforms also offer a percent scale. That is a different thing: it rebases the chart so the first visible bar is 0% and labels everything as a change from there, while the spacing can still be linear. Check which you have selected. If your platform buries the log setting or resets it every time you open a new symbol, that is one of the details worth testing before you settle on a tool, as the charting software buyer’s guide explains.

Common mix-ups

The usual mistake is comparing two charts drawn on different scales. Screenshots make it easy. Check the axis labels first, since evenly spaced dollar amounts mean linear and labels that crowd toward the top mean log. The other mistake is reading steepness on a linear chart as momentum. A stock compounding at a steady rate will always look like it is accelerating on a linear axis, even when its percentage gains have not changed at all.