Appendix C: Construction of Log Scaled Charts
There are a number of ways to take the log of a number. The two most common are log base 10 and log base e, or natural log, (ln). The natural log is preferred for log scaled charts.
To construct a log scaled chart you must proceed as follows:
- ◼ Decide on a box size. This is done by either deciding on a logged value, or, better still, a percentage change in price, because this is easy to understand and apply.
- ◼ The box increment is therefore (1 + % change). For example, if you have chosen a box size of 1%, the box increment is 1.01. In other words, the next box value is 1.01 times the previous box.
- ◼ Take the ln of the box increment. The ln of 1.01 is 0.00995.
- ◼ Take the ln of the starting price ...