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| Linear Price Scale |
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A type of scale used on a chart that is plotted in such a way that the values on the scale are spaced equidistantly. Each unit change is represented by the same vertical distance on the chart, regardless of what price level the asset is at when the change occurs. This price scale is mainly used in short-term trading, and it is often used by traders of commodity futures. Contrast this to "logarithmic price scale".
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A linear price scale is easy to identify because it is evenly spaced up the side of the chart. For example, a linear scale disregards the fact that a $5 move is more substantial when the price of an asset is $10 than when the price of the asset is $50. The price movement that is plotted on the chart is represented as being the same distance on the scale, even though the earlier $5 increase is equal to a 50% increase, while the latter is only a 10% increase. |
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