4 ms·
Stock price changes should be reported on a logarithmic scale, something like a decibel, perhaps finer, a centibel, cB. You go down 90%, that’s 10x less, -100 c
by jhrmnn 6y ago
Stock price changes should be reported on a logarithmic scale, something like a decibel, perhaps finer, a centibel, cB. You go down 90%, that’s 10x less, -100 cB. You go up 900%, that’s 10x more, +100 cB. A 5% decrease is 1.0526x less, -2.2 cB, a 5% increase is 1.05x more, +2.1 cB.
The fact that 5% is roughly 2 cB is because you need 100/2 = 50 of 5% increases (decreases) to give you roughly a 10x increase (decrease)
- optimiz3 6y agoIt's known as lognormal returns in quantitative circles.