Automatic construction of Linear Regression
A simple and at the same time quite effective Linear Regression indicator allows you to automatically build a linear regression channel.
It independently finds the necessary levels, you just have to decide to open an order that determines the boundaries of the channel.
When testing problems in the operation and installation of this script, no problems were found; the program is completely ready for use and can even work with default settings.
The construction is carried out based on the specified parameters; at your discretion, you independently set the channel width and time frames.
The program perfectly determines all significant minimum and maximum points in the time period you select.
After installation in the trading terminal, three defining lines will appear on your chart, two of which define the boundaries of the constructed channel, and the third will determine the direction of the main trend.
If necessary, you should change the color of the lines, since by default one of them may be displayed in black and will blend into the background of the trading terminal.
If you use a trading strategy with pending orders, a special mark will help you determine the desired price level, according to which you should place an order to break out the channel.
Setting Linear Regression parameters.
In essence, this is a fairly simple tool, for which to work correctly you only need to configure the following parameters:
FixedDateTime – an indicator on which the width of the channel will depend; we set the starting date from which the data is taken into account. When entering a date, you should focus on the working time frame, for example, if trading takes place on a 15-minute time period, then it is enough to take data for just one day.
STOP Color – the color that will be used to display the breakout price target.
Trend Line Color – channel border colors, green by default.
LR WIDTH – thickness of linear regression lines.
These are all the parameters necessary for operation; after entering them, you can launch the program.
Trading strategy.
When using the Linear Regression indicator, you can use two fairly well-known strategies - a breakout or a reversal.
Breakout is based on the use of pending orders, which are placed a little further than the price mark in the direction of the expected trend movement, and do not forget to set a stop loss; breakouts can also be false.
For a reversal - by analyzing the movement of the trend within the boundaries of the channel, the dynamics of price changes can be clearly seen; on its basis, we open transactions in an upward trend at the lower border of the channel, and in a downward trend at the upper border.
According to the trend , a transaction is opened as with a reversal strategy, but the position itself is held for a longer period of time, and you should take into account the stability of your deposit to price fluctuations.
Linear Regression is a simple and convenient tool for constructing linear regression lines, which significantly increases the efficiency of technical analysis.