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This indicator plots a string of linear regression lines, drawn on successive days. The Linear Regression Indicator has an advantage over a traditional moving average — it has less lag than the moving average and reacts more rapidly to price changes. This is a trend-identifying and trend-following indicator. If prices are higher or lower compared to the forecast value, one may anticipate that they will eventually return to more realistic levels. The Linear Regression Indicator highlights where the price should be trading on a statistical basis, while a deviation from the regression line will likely not last long.

Trading signals should be taken by using the direction of the Linear Regression Indicator. A trader may additionally use another such indicator with a longer period as a filter. A long entry or an exit from short position should be made, when the indicator turns to the upside.

A short entry or an exit from long position should be made, when the indicator turns to the downside.

The slope value is normalized by multiplying the raw slope value by and then dividing the result by the price. Normalization of slope values is crucial, if one is to compare markets, which trade within different ranges.

The normalized slope value reflects the price change in percent per bar of the regression line. If the normalized slope is 0. A normalized slope of Founded in , Binary Tribune aims at providing its readers accurate and actual financial news coverage.

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The Linear Regression Of Time and Price

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