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:
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.
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TIM Alerts
View All| Date | Stock | Position | Ideal Exit | % Gain |
|---|---|---|---|---|
| Nov 24 | KVHI | Short | $3.70 | 18% |
| Nov 20 | STSX | Short | $3.10 | 11% |
| Nov 18 | PERY | Short | $3.75 | 25% |
| Nov 11 | IIJI | Short | $2.80 | 5% |
| Nov 6 | CVI | Short | $4 | 15% |
| Nov 5 | MECA | Short | $1.95 | 51% |
| Nov 4 | CVI | Short | $4.81 | 4% |
| Nov 3 | NAK | Short | $3.20 | 5% |
| Oct 29 | EVC | Short | $2 | 26% |
| Oct 28 | HSNI | Short | $6.80 | 7% |
| Oct 28 | HSNI | Short | $5.75 | 4% |
November: 9 alerts, 15% avg gain
October: 11 alerts, 14% avg gain
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
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!
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
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
yah missed WSCI, too scared my post was responsible for the early strength, oh well…scary how well these patterns work!
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?
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.
Tim,
Did you see YTBLA’s tumble?
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
NCEN keeps going
FSLR ready to blow–way overvalued. Blew out last time, ready to do it again.
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!