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Why SmallCap Stocks Rock: Logarithmic vs. Linear Charts

Posted by timothysykes on Mon 7th of Apr, 2008 09:28:32 AM
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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:

logcoin Why SmallCap Stocks Rock: Logarithmic vs. Linear Charts

are more accurate than the linear version:

lincoin Why SmallCap Stocks Rock: Logarithmic vs. Linear Charts

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.

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  • timsykes
    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
  • timsykes
    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!
  • Webster
    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
  • Davey
    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
  • timsykes
    yah missed WSCI, too scared my post was responsible for the early strength, oh well...scary how well these patterns work!
  • neswick
    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?
  • puma
    qtww still climbing....
  • 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.

    [img]http://thetechnicaltrader.net/wp-content/uploads/2008/04/cnoa1.png[/img]
  • 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.
  • Jonathan
    Tim,

    Did you see YTBLA's tumble?
  • timsykes
    saw CNOA, now my kind of pattern.

    YTBLA is, couldnt find any borrows, post forthcoming

    software, I use thinkorswim:

    http://www.thinkorswim.com/tos/client/index.jsp...
  • Tony Ellis
    NCEN keeps going
  • FSLR
    FSLR ready to blow--way overvalued. Blew out last time, ready to do it again.
  • Banana
    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!
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Date Stock Buy Sell Net
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Oct 30 DDRX $25.70 $26.53 $812
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