Linear Regression Line Indicator For MT4
Table Of Contents:
- Linear Regression Line Indicator For MT4
- Selection of the time frame
- Trade with the most recent trend
- Setting up the stop loss and take profit
- Importance of money management policy
- Avoid trading the news
- Useful tips
Before we start discussing the details about the Linear Regression Line Indicator For MT4, we would like to describe linear regression. Some of you might think this is a very complex mathematical term but we will make things super easy. The linear regression line is a straight-line drawn which is drawn based on the calculations of a specific number of the candlestick. If the price deviates from the linear regression line, most of the time the price move back towards the linear regression line. Those who have experience in the trading profession might have guessed how we will use the Linear Regression Line Indicator For MT4 to find high-quality trades. But if you are new to this market there is nothing to worry. We will give you a clear guideline to use this indicator like a pro trader.
To make things easier, you can consider the linear regression line as a price magnet. So, how do we find this amazing line and trade the market like a pro trader? This is where the Linear Regression Line Indicator For MT4 comes into action. Load the indicator in your trading chart and you will get the desired line.
Selection of the time frame
To find the best possible trade setups based on Linear Regression Line Indicator For MT4, you need to trade the higher time frame. Most of the rookie traders are losing money since they don’t understand the importance of daily time frame trading strategy. They always trade the market in the lower time frame and loses a big portion of their investment. But if you intend to trade the market in the daily time frame, you will be able to find a clear trade setup based on the readings of the indicator. So, always chose a higher time frame, if you intend to make a profit by using the Linear Regression Line Indicator For MT4.
Trade with the most recent trend
You must learn to find the long term and most recent trend of the market. There is saying in Forex market, the trend is your friend. So, if you trade against the major trend chances are very high you will lose most of the time. So, always use the Linear Regression Line Indicator For MT4 to find the potential trade setups in favor of the market trend. Let's see an example to understand how we can use this indicator in our trade execution.
Figure: Short trade setup based on Linear Regression Line Indicator For MT4
From the above figure, you can see price attracted to the linear regression line. However, due to some high impact news or fundamental events, the bulls have gained control in the market. Based on the basic criteria of the linear regression line, we know price is most likely to touch the regression line, which means we will see a decent drop in the price. So, we need to find the nearest critical resistance level, to execute our short order. In the above picture, the shaded green zone is your potential selling spot.
You might feel confused with the use of Linear Regression Line Indicator For MT4, but there is nothing to worry. Open a demo account and try to execute trades based on the indicators reading. Once you feel comfortable with your demo trading performance, start trading the real market.
Setting up the stop loss and take profit
To set the stop loss, you need to have proper knowledge on support and resistance level. Place the stop loss just below the critical support level when you execute long orders. For a short trade setup, you need to set the stop loss just above the critical resistance level. Though this technique is extremely effective, you can still improve your accuracy by using the price action confirmation signal. But never use wide stop loss while trading the market with Linear Regression Line Indicator For MT4.
Setting up the take profit is very easy. Since the linear regression line acts as a price magnet, you need to set the potential to take profit just near the linear regression line. But always make sure you are trading the market with 1:3+ risk-reward ratio while using the Linear Regression Line Indicator For MT4.
Importance of money management policy
No matter which trading strategy you use, you must trade the market with proper money management. You might know all the features of Linear Regression Line Indicator For MT4 still you are not going to will all trades. Trading is all about probability and you need to prepare yourself for the worst-case scenario. Stop taking a huge risk since it doesn’t work in real life trading. Risk only 1-2% of your account balance at the initial stage so that you can lose a few trades in a row without having any mental stress. Once you feel confident, start taking 3% risk in each trade.
Avoid trading the news
The Linear Regression Line Indicator For MT4 works best in a stable market condition. So, if you execute trade before the high impact news release, chances are very high you will lose a decent portion of your investment. You need to know about the high impact scheduled news or else it will be really hard to make consistent profit from this market. There is nothing wrong to stay in the sideline during the extreme market condition. Always trade the market in a stable condition since it will reduce the risk factors to a great extent.
Trading is an art. The more you will learn the better you will become at currency trading profession. Become a student of this market and incorporate other technical methods while using the Linear Regression Line Indicator For MT4. Never forget indicators are helping tools in the Forex market. So, if you execute a trade without analyzing other important variables, you are going to lose money like 95% of the retail traders. Always think outside of the box and entertain the worst-case scenario. Never set unrealistic goals in the trading profession since it will force you to trade with high risk. Be a conservative trader and trade the market with proper discipline.