Why SmallCap Stocks Rock: Logarithmic vs. Linear Charts
Commenting on this post, I asked The Chairman why pros seem to prefer logarithmic—or log—charts over linear charts since they distort my precious chart patterns. His answer: it’s the linear charts that distort.
While he’s absolutely right that log charts like this:
are more accurate than the linear version:
since they better reflect % increases/decreases rather than absolute ($) gains, I’m right that linear works better for smallcraps and microcraps. Two simple reasons:
1. The vast majority of microcrap and smallcrap investors are total morons. They can’t understand it’s infinitely more difficult for a stock to run from $2 to $8 than it is to run from $6 to $12 (400% vs. 100% runup even though both lead to $6/share gains)…they think only in terms of $ gains (to see what they can afford at Costco)
2. When trading these POS stocks, log charts mask how steep multi-day runups like COIN are (since they’re better at showing the long-ter picture)
My trading is based on judging how others—the morons who influence/cause PennyStocking—in my niche think and act, so I’ll keep using these more primitive linear charts…another reason microcrap and smallcrap trading rocks as compared to trading the more scalable/liquid/competitive/tougher aka less predictable niches the big $ prefers.
Enjoyed this post? Sign up below and never miss a post again!
LoadingTIM make you some $$$$? Help him pay his expensive web designer!
Related Reading
14 Responses
Add a Comment!
If you want to receive TIMbucks, you'll first have to Login before posting a comment. Click here to learn more on the new TIMbucks rewards program.
Top TIMbucks
Join the ranks! TIMbucks is a cool new rewards program designed to get you guys to share your thoughts, ideas and experiences openly. Our top TimBucks earners to date are:
- Davey (132)
- Yngvai (124)
- ViciousChicken (104)
- ivegotstylekid (82)
- timothysykes_forums (75)
- jj (72)
- Dan_O (50)
- Ben_Bien (47)
- Blithe (43)
- investorslive (39)
Navigate
$
Updated Daily!
136 Books
Up 52%
20 Videos
3 Podcasts
8 Talking Pics
65 Links
Stocks Review
UPDATES
May 15, 2008Yup, by next Monday, everything's gonna be real working-like!
May 15, 2008PDO, up $4+ today, will teach you not to randomly short strong penny stocks, get in, get out then run...cuz sometimes they squeeze stubborn shorts to death!
May 15, 2008No ideal short plays today, check out these 2 interviews while we wait for price action perfection
I wish I'd listened to my own rulebook, instead got squeezed for $400 shorting blatant-fraud KYUS too early...someone needs a refresher course this weekend!
I nailed NCOC's 20% rise today in my pre-market post, but I was too biased against buying little breakouts, learn from my mistakes!
May 15, 2008Lots and lots of new sketchy stocks to watch
Stock Watchlist
| XRM | $4.54 | |
| SSBX | $3.25 | |
| APWR | $22.15 | |
| VRML | $2.54 | |
| NTHH.OB | $0.21 | |
| DPDW.OB | $1.04 | |
| CROX | $10.97 | |
| SUNV.OB | $1.45 | |
| AYSI.OB | $2.10 | |
| FORC.OB | $2.29 | |
| CNEX.PK | $4.10 |
TIMtrades
Learn from my successes, learn from my failures, learn from 
50% TIMreads
TIMtags
Loading ...
1timsykes
April 7th, 2008 at 9:34 am
SYNM entry at $1.20 is looking pretty good right now, just gotta take out $1.15…c’mon…you can do it….just…so…..close
2timsykes
April 7th, 2008 at 10:01 am
out of SYNM at $1.07, perfect crack of $1.15, stop losses go off, I buy into the panic, could go lower, but I take my $370 profit and run…you don’t question 10% gains in less than an hour….god i love this game!
3Webster(TIMBUCKS: $2)
April 7th, 2008 at 10:04 am
Nice play on this one Tim. Was a bit late to the party and saw this blog entry too late. Stock was already at 1.15 and heading down. Guess I need to check this site first thing in the morning
4Davey(TIMBUCKS: $132)
April 7th, 2008 at 10:04 am
Great trade man, and a great call on WSCI, that’s one of your best long alerts in a while. Great breakout and solid volume
5timsykes
April 7th, 2008 at 10:06 am
yah missed WSCI, too scared my post was responsible for the early strength, oh well…scary how well these patterns work!
6neswick(TIMBUCKS: $2)
April 7th, 2008 at 10:18 am
PSTI is up more than 40% today on positive preclinical data. I’m fairly new to this, would that be considered “real news” or is this worth playing?
7puma
April 7th, 2008 at 10:24 am
qtww still climbing….
8Cameron Fous
April 7th, 2008 at 10:24 am
agreed, logarithmic charts suck as they distort reality. I really don’t see any good use in them.
Checkout CNOA.OB on the breakout today tim. I reccoed this yesterday in at 1.33.. Broke out from 1.43 resistance this morning. Heres yesterdays chart before todays breakout.
9Michael Goode
April 7th, 2008 at 10:32 am
Anybody watch YBTLA’s 40% crash so far today? I wanted to short this over the last couple days but IB didn’t have any shares available.
10Jonathan
April 7th, 2008 at 10:40 am
Tim,
Did you see YTBLA’s tumble?
11timsykes
April 7th, 2008 at 10:45 am
saw CNOA, now my kind of pattern.
YTBLA is, couldnt find any borrows, post forthcoming
software, I use thinkorswim:
http://www.thinkorswim.com/tos.....de=0907_02
12Tony Ellis(TIMBUCKS: $24)
April 7th, 2008 at 10:57 am
NCEN keeps going
13FSLR
April 7th, 2008 at 3:38 pm
FSLR ready to blow–way overvalued. Blew out last time, ready to do it again.
14Banana(TIMBUCKS: $5)
April 24th, 2008 at 2:05 pm
Hey Tim,
I have a dumb question. Do you use Margin to short or are you strictly using the cash you started out with?
thanks!