4 replies to this topic

[milantrader]

http://www.traderscr...dex.php?p=intra

[MaryAM]

The DOW formula does not have a constant - making it an invalid mathematical formula much less an average.  It becomes a separate and unique equation every time they replace a stock and/or split and reduce or increase the divisor.  You can only look at a separate chart for each new formula.   If you force a constant into the equation giving it a slope of 1 you get a damped harmonic oscillator - multiply the reported average by the divisor will do the trick.   You simply can't log transform the average number reported over the decades.  Log transformations require that the underlying equation must contain a constant in the formula.   A divisor <1 makes the formula a multiplier - not an average.  Right now 100 points is roughly $15.

[Dex]

I understand the concept of a log scale, but I think it doesn't add clarity. 

[milantrader]

Clarity about what, Dex? You can use the log scale to calculate an underlying trend. I did one from 1900. Not posted yet.The pitchforks (1973 and 2007) are approximately in line with each other. Thats all. 

[Dex]

Clarity about what, Dex? You can use the log scale to calculate an underlying trend. I did one from 1900. Not posted yet.The pitchforks (1973 and 2007) are approximately in line with each other. Thats all. 

 

Log scale chart are used when there is large data variances and percentage changes.

 

Do you get the same results when you use arithmetic scale?