Forex Online Trading? Linear Regression As a Trading ToolPosted by Nance Davidson on January 25th, 2021 Trading Forex online has become popular in recent years. The trading platforms are offering a lot of free advanced trading tools which have made it easier to trade Forex. Which trading tool is the best depend on the trader. One way to find the right trading tool is testing the trading tools on the trading platform. A test could be 20 trades with the Bolling Bands and the stochastic oscillator as the primary indicator and the Alligator indicator as the secondary indicator. Another test could be 20 trades with the simple moving average as the primary indicator and the stochastic oscillator as the secondary indicator. Evaluate on the test and find the test that have gained most profit and felt most comfortable. The test should be made regularly with different trading tools. It will give the trader a better understanding of each trading tools and probably also improve the profitability. One of the advanced trading tools the trading platforms offer is the statistical method linear regression. It is a method that follows the trend statistical. The non-linear regression line is a plot of the prices over a time period. drill pipe elevator of the prices is becoming a trend line by using the calculation least squares fitting which minimize the distance between the plot of the actual prices and the trend line. The linear regression indicates if the market trend is bullish or bearish. A bullish market is a market where the prices are rising and a bearish market is a market where the market prices are falling. The line signals are like a forecast of how the price will develop in the coming period based on the present period's prices. Is the price higher than the forecast the traders will expect the prices to return to a lower level. Is the price lower than the forecast the traders will expect the prices to return to a higher level. A change in the trend is confirmed when the linear regression line and price line are crossing each other. teda power tongs is and confirmation because the change in the linear regression line is delayed in comparison with price line changes. Linear regression and the simple moving average give similar signals. The difference is that the simple moving average is based on an average price in a given point over a time period and not on fitting the trend line to the price plots. Since the simple moving average line is based on an average the line will signal a change in the trend later than the linear regression line. One way to test if the linear regression line is the right trading tool could be a test consistent of 20 trades with the linear regression as the primary indicator and the stochastic oscillator as the secondary indicator.Like it? Share it! More by this author |