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Not disagreeing with you about the utility of technical analysis, and not saying that was the best chart selection to illustrate the author's point, just pointi

Not disagreeing with you about the utility of technical analysis, and not saying that was the best chart selection to illustrate the author's point, just pointing out that the reason the author didn't start at zero is not the same reason most charts don't start at zero (the chart person doesn't know the rules). A metaphor might be if you listen in on a conversation between two experts and they are using jargon that you know is technically imprecise. If you say "that's not really what that means" then the response is usually "bugger off because we know what it means and there's a good reason we say it like that and we're not changing it just because you are listening."

amelius 9y ago
> there's a good reason we say it like that But could you explain that in this particular case? For instance, let's say bitcoin is at $10,000 and it moves a few cents up and down, giving big swings in your non-zero-based graph. Why are those big swings saying anything meaningful to a financial type? In my graph, the line would be almost flat, and clearly indicates that nothing is really happening (low volatility).
- philipodonnell 9y ago
  > But could you explain that in this particular case? Sure, its helps me to think through these things too. :-) In your graph, you probably don't mind that its almost flat, but if I am someone who makes money by trading every day, I'm interested in very small moves, a couple of pennies, maybe 0.5% over the course of a day. And that's _all_ I'm interested in. Where is the price over the last few days and how does that compare to the price of some other thing? Knowing the relationship of the current price to zero is really not important because it a) has never been at zero, b) is not going to go to zero, and c) zero is meaningless in pricing anyway. That last one is kind of unintuitive. You can't buy or sell a share at a $0 price. A $0 price implies that there are no buyers or sellers. No buyers or sellers means means the price is undefined, not $0. No matter how low the price gets, it can never be assumed to trade at $0. No stock has traded at a $0 price (even in bankruptcy there are always some value to the shares right up until they are liquidated and cease to exist). No stock has ever opened at $0, they IPO in the $20-30 range (or somewhere non-zero anyway). So if zero doesn't mean anything, then you have to say, what should the minimum be? Well, you can say $0.01, but that's just as arbitrary. Assets are infinitely divisible in theory, and lots of trades are made at lower denomination that the currency, take the $0.000000008 / share SEC fee. If any choice is going to be arbitrary, then you have to go back to the intention, which is to compare current price movements to recent price movements to understand what's happening, so just make sure your chart has all the recent price movements and then add +/- something like 10% on either side to give some padding and emphasize breakouts... a.k.a a flexible axis. In this particular case, I suppose it is the author's intention. If they wanted to emphasize the volatility of recent movements, a flexible axis is right for that. If they wanted to minimize the volatility, a fixed axis starting at $0 is better. But, objectively, there is no reason to _insist_ on starting at $0.
  - amelius 9y ago
    > maybe 0.5% over the course of a day But how does the trader know it's (on the order of) 0.5% by looking at the graph, if it doesn't start at zero? Now they have to look at the absolute value on the Y-axis, estimate the fluctuation in the graph and divide. PS: appreciate your lengthy reply.
    - philipodonnell 9y ago
      There's usually an option to just convert the axis from absolute $$ to % change from the earliest data point. Plus, most professionals aren't going to ever look at one particular stock, like an Apple trader will have Apple, a tech sector ETF and the S&P500. As soon as you add a second series the y-axis _has_ to revert to a percentage change. They'll all start at the same point, which will be labeled 0%, and then diverge.

amelius 9y ago

> there's a good reason we say it like that But could you explain that in this particular case? For instance, let's say bitcoin is at $10,000 and it moves a few cents up and down, giving big swings in your non-zero-based graph. Why are those big swings saying anything meaningful to a financial type? In my graph, the line would be almost flat, and clearly indicates that nothing is really happening (low volatility).

philipodonnell 9y ago
> But could you explain that in this particular case? Sure, its helps me to think through these things too. :-) In your graph, you probably don't mind that its almost flat, but if I am someone who makes money by trading every day, I'm interested in very small moves, a couple of pennies, maybe 0.5% over the course of a day. And that's _all_ I'm interested in. Where is the price over the last few days and how does that compare to the price of some other thing? Knowing the relationship of the current price to zero is really not important because it a) has never been at zero, b) is not going to go to zero, and c) zero is meaningless in pricing anyway. That last one is kind of unintuitive. You can't buy or sell a share at a $0 price. A $0 price implies that there are no buyers or sellers. No buyers or sellers means means the price is undefined, not $0. No matter how low the price gets, it can never be assumed to trade at $0. No stock has traded at a $0 price (even in bankruptcy there are always some value to the shares right up until they are liquidated and cease to exist). No stock has ever opened at $0, they IPO in the $20-30 range (or somewhere non-zero anyway). So if zero doesn't mean anything, then you have to say, what should the minimum be? Well, you can say $0.01, but that's just as arbitrary. Assets are infinitely divisible in theory, and lots of trades are made at lower denomination that the currency, take the $0.000000008 / share SEC fee. If any choice is going to be arbitrary, then you have to go back to the intention, which is to compare current price movements to recent price movements to understand what's happening, so just make sure your chart has all the recent price movements and then add +/- something like 10% on either side to give some padding and emphasize breakouts... a.k.a a flexible axis. In this particular case, I suppose it is the author's intention. If they wanted to emphasize the volatility of recent movements, a flexible axis is right for that. If they wanted to minimize the volatility, a fixed axis starting at $0 is better. But, objectively, there is no reason to _insist_ on starting at $0.
- amelius 9y ago
  > maybe 0.5% over the course of a day But how does the trader know it's (on the order of) 0.5% by looking at the graph, if it doesn't start at zero? Now they have to look at the absolute value on the Y-axis, estimate the fluctuation in the graph and divide. PS: appreciate your lengthy reply.
  - philipodonnell 9y ago
    There's usually an option to just convert the axis from absolute $$ to % change from the earliest data point. Plus, most professionals aren't going to ever look at one particular stock, like an Apple trader will have Apple, a tech sector ETF and the S&P500. As soon as you add a second series the y-axis _has_ to revert to a percentage change. They'll all start at the same point, which will be labeled 0%, and then diverge.