Regression Analysis Indicator For MT4
Table Of Contents:
- Regression Analysis Indicator For MT4
- Selection of the currency pair
- Trading the major chart pattern
- Execution of the trades
- Setting up the stopples and take profit
- Dealing with the major news
- Managing the risk factors
Regression Analysis Indicator For MT4 is mainly used to the compared variable price movement of the financial instrument based on statistical data. Being a new trader you don’t have to do the complex calculations to find the potential trading spots using the dependent and independent variables. Just download the Regression Analysis Indicator For MT4 and you are ready to execute the trades. Those who are relatively new to this trading profession might not understand how the complex data is handled by this indicator. The indicators rely on linear, quadratic, logarithmic and exponential regression and present suitable trading spots. If you look at the above chart, you can see the descending channel and execute short orders with an extreme level of precision.
Selection of the currency pair
Selection of the currency pairs plays a great role when you use the Regression Analysis Indicator For MT4. If you trade the cross pairs, chances are very high you will have to deal with a false spike. Majority of the novice traders prefers to trade synthetic or cross pairs since they are more volatile. But you need to understand the fact, trading the volatile market requires an extreme level of precision. Being a rookie trader, it’s better to trade the major pairs. However, you can also execute the trade in the cross pairs provided the trend is clear. Avoid trading the choppy market if you intend to make a profit by using the Regression Analysis Indicator For MT4.
Trading the major chart pattern
By using the Regression Analysis Indicator For MT4 you can also improve your chart pattern trading technique. Indicators are nothing but helping tools. If you rely on the readings of the indicators, chances are very high you will never be able to find the best possible trades in the market. Let’s give you a simple example of head and shoulder chart pattern trading by using the Regression Analysis Indicator For MT4.
Figure: Trading the head and shoulder pattern
From the above figure, you can easily spot the head and shoulder pattern. Majority of the retail traders would execute short orders after the breach of the neckline. But if you use the Regression Analysis Indicator For MT4, it would be really easy to assess the quality of the trade setups. For instance, a valid chart pattern will always be found inside the channel of the indicator. But in the above figure, you can see a false breakout of the channel. So, how do you spot a false breakout? This is where you need to use the price action confirmation signal. Just above the upper band of the indicator, we have bearish price action confirmation signal. So, the breakout is a false signal.
Execution of the trades
Spotting the major chart patterns in the Forex market is a very complex task. But this doesn’t mean the Regression Analysis Indicator For MT4 is only used to trade the major chart patterns. If you use the indicator properly, you can always take advantage of the three bands. The upper band act as critical resistance and the lower band act as a dynamic support level. The mid-band is used to assess the sentiment of the market. If the price of a certain asset stays below the mid-band, you can say the bears are in control of this market. On the contrary, if the price of a certain asset stays above the mid-band, the bulls are in control.
So, how do we execute the trade? If you use the Regression Analysis Indicator For MT4 in the higher time frame, you can execute long orders at the lower band and go for short at the upper band. But things are completely different when you use it in the lower time frame. You need to rely on the price action confirmation signal to increase your win rate.
Setting up the stopples and take profit
Many professional traders use the Regression Analysis Indicator For MT4 to find the desired stop loss and take profit level. If you execute long trades, you need to set the stop loss just below the lower band of the indicator. On the contrary, you need to set the stop loss just above the upper band of the Regression Analysis Indicator For MT4. The initial take profit level will be set at the mid-band but some retail traders prefer to use the trailing stop loss features since it allows them to maximize the profit.
Dealing with the major news
Though the indicators provide precise dynamic support and resistance to the retail traders, you need to consider the probability factors in trading. No matter which trading strategy you follow, you are bound to lose trades. Most of the retail traders lose money during the event of high impact news. On the event of high impact news, the market becomes extremely volatile and the price of a certain asset tends to break the critical support and resistance level. So, try to learn the details of fundamental analysis so that you can stay in the sideline before such high impact news. Always execute the trade when the market shows stability.
Managing the risk factors
Being a fulltime Forex trader, you must learn to embrace the losing trades. Though Regression Analysis Indicator For MT4 can indicate the best potential trading spot, still you need to prepare for the worst-case scenario. No matter which time frame you trade, you should never risk more than 2% of your account balance. However, if you incorporate a price action trading strategy, you can risk 3% of your account balance.
Trading is nothing but a sophisticated business. You must train your mind to embrace the losing trades regularly. Never execute any trade based on the readings of Regression Analysis Indicator For MT4, unless you have a 1:2+ risk-reward ratio. Make sure the winners are always bigger than the losers. Using the simple rule of money management, you can easily make a huge profit from this market and secure your financial freedom. If you ever get confused, open a demo account and learn the proper use of Regression Analysis Indicator For MT4.