Technical Glossary / Chart Types & Price Representation
Linear Chart
A price scale on which equal vertical distances are equal price units.
Teaching sketch. It shows the shape, not a live quote and not a trade signal.
Definition
A linear, or arithmetic, scale gives the same vertical space to each rupee. A move from 100 to 110 looks the same height as a move from 1,000 to 1,010, even though the first is 10 percent and the second is 1 percent.
How it works
This is the default on most platforms and the right scale when you think in points: index futures, a day's range, a stop of 20 points. It is a poor scale for a ten-year chart of a stock that has multiplied.
How to identify it
Axis labels step by a constant amount. Gridlines are evenly spaced in price.
How traders use it
Use linear for intraday and for any measured move you will express in points. Switch to log when you compare percentage swings across very different price levels.
Common mistakes
Calling a recent rally "the biggest ever" because it is the tallest line on an arithmetic long-term chart. The tallest line is often just the latest, because the price is higher.
Limitations
Trendlines and channels change when you flip between linear and log. A break on one scale is not automatically a break on the other. Say which scale you drew on.
This note explains the term. A sketch shows the shape of the idea. Neither is a recommendation, a signal, or a comment on any security. Indicator settings and exchange conventions differ. Check the live chart and the contract specification before you use a number.