Arithmetic Charts Learning

Arithmetic Charts

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Time Frames Intraday (1m-1h) Daily Charts Weekly Analysis Monthly Overview

Arithmetic Scale Basics

$200

$150

$100

$50

Equal spacing between price levels. Each grid line represents the same dollar amount difference.

Linear Price Movement

Linear Growth

Price changes appear proportional to their absolute dollar value. Useful for analyzing fixed-dollar movements.

Best Use Cases

Short-term trading, intraday analysis, and when absolute price levels are more important than percentage changes.

Arithmetic Scale Advantages

Visual Clarity

• Easy to read exact price levels
• Clear support/resistance identification
• Simple gap analysis
• Intuitive price target calculation

Trading Applications

• Day trading strategies
• Fixed dollar stop losses
• Absolute price breakouts
• Short-term pattern recognition

Scale Comparison Example

Arithmetic Scale View

Price moves from $100 to $200 (+$100) appears the same as $200 to $300 (+$100), even though the percentage gains are different (100% vs 50%).

Logarithmic Scale View

The same price data shows the 100% move ($100 to $200) as larger than the 50% move ($200 to $300), reflecting the true percentage impact.

When to Use Arithmetic

• Short-term analysis (days/weeks)
• Fixed dollar strategies
• Support/resistance levels
• Gap trading
• Intraday patterns

When to Use Logarithmic

• Long-term analysis (months/years)
• Percentage-based strategies
• Trend line accuracy
• Growth stock analysis
• Volatile asset comparison

Key Differences

• Scale spacing methodology
• Trend line slopes
• Pattern proportions
• Volatility perception
• Time frame suitability

Common Misconceptions

Myth: Arithmetic is Always Better

Reality: Each scale serves different purposes. Arithmetic excels for absolute price analysis, while logarithmic better represents percentage-based market dynamics.

Myth: Logarithmic Distorts Data

Reality: Logarithmic scale provides a more accurate representation of percentage changes, which is how most market participants think about returns.

Linear Price Movement Analysis

Price Change Calculation

Starting Price: $150.00

Ending Price: $165.00

Absolute Change: +$15.00

Percentage Change: +10.00%

Linear Progression Example

Week 1: $100 → $110 (+$10)

Week 2: $110 → $120 (+$10)

Week 3: $120 → $130 (+$10)

Week 4: $130 → $140 (+$10)

Equal dollar moves appear identical on arithmetic scale

Percentage vs Absolute Analysis

Price Move	Absolute Change	Percentage Change	Arithmetic View	Log View
$50 → $60	+$10	+20%	Small move	Large move
$100 → $110	+$10	+10%	Same size	Medium move
$200 → $210	+$10	+5%	Same size	Small move

Support/Resistance on Arithmetic

Round numbers appear as natural levels ($100, $150, $200)
Historical highs/lows maintain visual significance
Gap levels clearly visible and measurable
Fixed dollar stop-loss levels easy to set

Trend Analysis Considerations

Trend lines may appear steeper than on log scale
Channel widths remain constant in dollar terms
Pattern measurements in absolute price units
Volatility appears consistent across price levels

Scale Type Detector

Current Scale Arithmetic

Linear price progression detected

Price Range $145 - $195

$50 total range with $10 intervals

Optimal For Short-term

Day trading and absolute levels

Price Movement Calculator

Starting Price

Target Price

Scale Comparison

$100 → $110

+$10

+10%

$150 → $160

+$10

+6.7%

$200 → $210

+$10

+5%

Same dollar moves, different percentages

Learning Progress

Scale Types Mastered 2/4

Learn logarithmic and semi-log scales next

Quick Reference

Arithmetic Scale: Equal $ spacing

Logarithmic Scale: Equal % spacing

Best for Short-term: Arithmetic

Best for Long-term: Logarithmic