Chapter - 4
Introduction to Charts
Part II
CMT LEVEL - I

Multi-line Charts
• The multi-series line chart is used to visualize
trends and relationships in multiple datasets.
•It consists of various data points connected using
line segments, where each point represents a
single value.
•It is widely used to show continuous data like
temperature or earnings per quarter.

Multi-line Charts

Vertical Scale
CMT LEVEL - I

Logarithmic Scale
• Log Scale represents price spacing on the
vertical or y-axis dependent on the percentage of
change in the underlying asset's price.
•A logarithmic price scale is plotted so that the
prices in the scale are not positioned
equidistantly—equally from one another.

Example of Logarithmic Scale
•A logarithmic price scale will show different vertical
movement for the changes in price between $10 and
$15 and the change in price between $20 to $25.
•While both are the same dollar amount move, the first
$5 change represents a 50% increase in the asset's
price.
•The second $5 change represents a 25% increase in
the asset's price. Since a 50% gain is more significant
than 25%,

Linear Scale
A linear price scale uses an equal value
between price scales providing an equal
distance between values.

Example of Linear Scale
• An increase in price from $10 to $15 is
represented by the same upward movement
as is an increase between $20 and $25 on the
linear chart.
• Both increases are $5, and the linear chart
represents the price in equal segments.

Logarithmic Scale V/s Linear Scale

Scale Chart – Rule of Thumb
•When the security's price range over the period
being investigated is greater than 20%, a
logarithmic scale is more accurate and useful
•The truly long-term charts (more than a few
years) should always be plotted on logarithmic
scales.
•Stock market charts use Log Scale whereas future
charts uses Linear Scale

Volume
Volume is commonly
portrayed at the bottom
of the price chart, with
its own scale, using a
vertical bar to represent
the total volume for
each interval.

Equi Volume
An Equi Volume box consists of
three components: the price
high, the price low and the
volume.
The price high forms the upper
boundary, the price low forms
the lower boundary and volume
dictates the width.
Equi Volume boxes are black
when the close is above the prior
close and red when the close is
below the prior close.

Equi Volume
A rectangle is constructed for each day,
with the height of the rectangle
depicting the price range and the width
of the rectangle depicting the volume.
Volume is important for validating a
move, in particular support or
resistance breaks.
A break on low volume is not as
convincing as a break on high volume.
Low volume shows tepid interest and
weak buying or selling pressure.
In contrast, high volume reflects
elevated interest and strong buying or
selling pressure.