For technical analyst investors, understanding both linear price scales and logarithmic price scales is key. A linear price scale is the easy one: it’s linear, meaning that vertically, each unit is the same. For example, every horizontal line is, say, ten units, tracking the price of an asset (vertical axis) over time over (horizontal axis).
Logarithmic price scales are the trickier ones. Logarithmic price scales have constant time on the x-axis...same as the linear price scale...but have a logarithmic (rather than arithmetic) scale on the y-axis. Comparing a linear price scale to a logarithmic price scale will give you an intuitive sense of how the logarithmic price scale works (exponential).
Linear price scales are useful because they’re intuitive, but logarithmic price scales are arguably more useful once you get the hang of them. Since logarithmic price scales aren’t linear, they’ll more easily show big vs. small movements. For example, if a $50 asset doubles to $100, that’s a big move...compared to an asset going from $950 to $1,000.