What is the difference between logarithmic and linear in forex charts?
“Linear” and “logarithmic” refer to how the vertical axis (y-axis) of a chart maps prices to screen height. In forex charting, this changes the visual spacing of price movement, which can change how you interpret the size of rises and falls.
A linear scale places equal absolute changes in price at equal distances. For example, moving from 1.1000 to 1.1100 covers the same vertical distance as moving from 1.5000 to 1.5100, because both moves are +0.0100 in price terms.
A logarithmic scale places equal percentage changes at equal distances. Using the same idea, a +1% move from 1.1000 to 1.1110 covers the same vertical distance as a +1% move from 1.5000 to 1.5150. This makes the chart’s geometry “normalize” for scale differences.
Because forex prices can move through different regimes over time, the chart type can affect how you visually compare “how big” a move was.
How does logarithmic vs linear work?
Both chart types start from the same basic inputs: a time series of prices (for example, closes) plotted against time on the x-axis.
The difference is the mapping from price to y-axis height:
- Linear scaling: the plotted height is proportional to the price value itself. Equal differences in price correspond to equal vertical spacing.
- Logarithmic scaling: the plotted height is proportional to the logarithm of the price value. Equal percentage changes correspond to equal vertical spacing.
Practical implication: when price rises strongly or falls strongly, linear charts can visually “compress” later moves relative to earlier moves (or vice versa), while logarithmic charts can make percentage-based comparisons look more consistent.
A key assumption behind any percentage-based reasoning is that you are comparing moves relative to the correct reference point (for example, the prior price or the chosen anchor level). Without that, “percentage move” can be misinterpreted.
Example comparison (with assumptions)
Assume you plot the same two time segments on either a linear or logarithmic y-axis.
- Segment A: price goes from 1.00 to 1.10 (+10%).
- Segment B: price goes from 2.00 to 2.20 (+10%).
On a logarithmic chart, both +10% moves take the same vertical distance. On a linear chart, Segment A (+0.10) and Segment B (+0.20) take different vertical distances because the absolute changes differ.
Now assume an analyst is trying to compare “the magnitude” of two moves. If they only look at vertical distances without noting whether the axis is linear or logarithmic, they may reach different conclusions.
Limitations and risks of relying on visual interpretation
Logarithmic vs linear changes visualization, not the underlying data. That means:
- Visual similarity is not predictive. Matching shapes or distances on a chart does not, by itself, imply that a similar future move will occur.
- Percentage vs absolute comparisons can conflict. If one method makes moves look comparable and the other does not, you may be comparing different “sizes” of change than you think.
- Edge cases and validity constraints exist. Logarithmic scaling requires strictly positive values because the logarithm of zero or negative numbers is undefined. Currency pair prices are typically positive, but any custom preprocessing or derived series must maintain positivity.
- Historical relationships may not hold. Even if you learned an interpretation rule from the past, it cannot guarantee future behavior.
These risks are about interpretation and verification. Outcomes in trading depend on many variable factors—market conditions, costs, execution, and jurisdiction—none of which are determined by chart scaling alone.
How can you verify what you are seeing?
Independent verification comes from checking the mechanics rather than trusting conclusions.
- Confirm the axis setting in your charting tool: ensure you are actually viewing “linear” or “logarithmic” scaling. - Compare the same two time points numerically. Compute the absolute difference and the percentage difference between the prices, and see which chart matches your intended comparison. - Use a consistent reference anchor when reasoning about percentage moves (for example, “relative to the move start”), otherwise percentage interpretations can shift. - **Test interpretation sensitivity. ** Ask whether your conclusion still follows if the chart scaling changes.