Four ways of drawing the same data, each discarding something different.
What does each type of stock chart show?
A line chart plots one value per period, almost always the close, and joins the points. It discards the range and the open. That loss is often a gain, because the close is the price at which the day's disagreement was settled, and the intraday noise it drops is mostly noise.
A bar chart draws a vertical line from the session's low to its high, a left tick at the open and a right tick at the close. Four numbers per session, nothing thrown away except the path.
A candlestick chart carries the same four numbers with the body drawn between open and close, filled or hollow by direction, and the wicks running to the high and the low. The convention came from Japanese rice traders, is attributed to Munehisa Homma in the eighteenth century, and reached Western desks through Steve Nison's Japanese Candlestick Charting Techniques (1991). A candlestick chart contains exactly the same information as a bar chart. It reads faster because the eye picks up filled areas more quickly than tick marks, which is a real advantage and not an analytical one.
A point-and-figure chart throws away time altogether. It plots columns of X for rising prices and O for falling prices, moves only when price traverses a whole box, and starts a new column only when price reverses by a stated number of boxes. Sessions in which nothing much happens produce nothing at all. On the fifty closes in Worked Example 6, a bar chart draws fifty bars; the point-and-figure chart draws eleven columns, a 78.0% reduction in marks on the page, and 15 of the 49 day-on-day moves put no ink on it whatsoever.
Advertisement
Log scale vs linear scale: which should you use?
The scale question is the one that changes conclusions rather than appearances. On a linear vertical axis, equal distances mean equal currency amounts. On a logarithmic axis, equal distances mean equal percentage changes. A move from 100 to 200 and a move from 200 to 400 are both a doubling: on natural logs they are 5.298317 minus 4.605170 and 5.991465 minus 5.298317, which is 0.693147 in both cases, identical. On a linear axis the second doubling is drawn twice as tall as the first, and the chart appears to be accelerating when the growth rate has not changed at all.
Run that on the price series you will work through. Sahyadri Ceramics (synthetic) goes from ₹240.00 to ₹262.94 over the first four hundred sessions, then to ₹435.08 over the next four hundred. In rupees those legs are plus 22.94 and plus 172.14, so a linear chart draws the second leg 7.5039 times the size of the first. In logarithmic terms the ratio is 5.5167. Either way the second half was the bigger move, but a trendline fitted by eye to the linear chart will diverge from one fitted to the log chart, and any conclusion resting on "the trend is steepening" rests on which chart you happened to be shown.
For any series longer than about a year, or any comparison between two series at different price levels, the logarithmic scale is the honest default.