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Rick

Linear / Logarithmic Scale

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Linear/Logarithmic Scale

Linear Scale: A scale where distances on the vertical axis represent equal net changes.

Logarithmic Scale: A scale where distances on the vertical axis represent equal percentage changes.

The linear scale in the weekly chart of Microsoft (below) makes the price advances over the past five years look rounded, with nearly all of the gain occurring in the last two years.

The logarithmic scale of the same time period (below) shows a well-defined trend. In this case, scaling by equal percentage changes on the vertical axis creates a clearer picture of growth over time.

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