Logarithmic Price Scale

Definition:

Also known as "Log" price scale or a "Log" chart. Logarithmic scaling will space price value based on a percent move that is equal to another percent move.

Background:

This ultimately creates the same vertical height on the price scale regardless of the price associated with the move. This type of scaling helps "normalize" price movements by percentages rather than absolute price numbers. Logarithmic scaling takes into account that a point value move is typically more significant on a lower priced stock than a higher priced one, helping visually differentiate diverse value levels.

Practical Use:

Identifying whether or not a chart is logarithmic is as simple as viewing the vertical price scale on a chart. The price scale up the side of a Logarithmic chart price is not evenly spaced. The distance between the numbers decreases as the price of the underlying asset increases.