Linear Regression Breakout System For MT4
Table Of Contents:
- Linear Regression Breakout System For MT4
- The linear regression breakout system for forex – Long positions
- The linear regression breakout system for forex – Short positions
- Is the linear regression breakout system for forex good for you?
Please note: This strategy was publicly published in the trading community and is free to use. We do NOT make an attempt to decide if this strategy is profitable or not, because we know that the major factors regarding trading results are the skills/experience of the trader who executes the strategy. Therefore, we are mainly explaining the components and rules of the strategy. If applicable, we are highlighting advantages, disadvantages and possible improvements of the strategy.
The Linear Regression Breakout System For MT4 is a trading strategy that focuses on the linear regression. This trading system however is a trend following strategy contrary to the name. However, the trading system is very simple and uses just two indicators, which is the Supertrend indicator and the schaff plot dcec alerts.
The schaff plot indicator is a modification of the famous schaff trend cycle indicator. Also known as the STC for short, it is an oscillator indicator which is used to identify the positive and negative cycles in the trend. In other words, the schaff trend cycle indicator can plot the bullish and the bearish momentum in the markets.
Apparently, according to some, the STC indicator is able to detect with pin point precision on the entry and exit points in a trade. The STC is one of the most easiest to understand indicator. In some cases, people say that the Schaff trend cycle indicator is actually a better version of the MACD indicator.
Similar to an oscillator, the STC revolves around fixed levels. For the Schaff trend cycle indicator, the fixed values are 75 and 25. When the STC is above 25 it signals that the market is in an uptrend, or in other words, positive cycle.
Likewise, when the Schaff trend oscillator is below 75 it indicates that the market is in a downtrend or in a negative cycle. When the indicator is above 75 or 25, it signals that the trend is very likely to continue or even reverse, depending on the market conditions.
Following the Schaff trend indicator, we then have the super trend indicator. The super trend indicator plots on the price chart directly. As the name suggests, the super trend indicator visually shows the trend in the markets. It plots either above the price in a downtrend or below the price in case of an uptrend. It also changes colors from red to green or vice versa. There are also some alerts that are displayed on the price chart.
You can use the super trend indicator as a way to trail your stops to capture the best part of the trends. Finally, we also have the linear regression indicator. This indicator doesn't do anything to what you would expect from a linear regression indicator. It simply plots a few levels of consolidation and shows a direction of the breakout.
While in hindsight this indicator might seem amazing, bear in mind that there is a significant lag in this indicator. For the most part you wont see the linear regression indicator in action. This is because the signals that come form this indicator are far and few between.
Therefore, the only two main indicators you will be trading with in the linear regression breakout system for forex is the schaff trend cycle indicator and the super trend indicator. It is a bonus if you get to see the linear regression indicator also give you valid signals while you are trading. Let's now take a look at how you can trade the long and short positions in the markets using the linear regression breakout system for forex.
The linear regression breakout system for forex – Long positions
For long positions in the linear regression breakout system for forex, start by looking at the price and determine its trend. Here, we need to see the Super trend indicator to cut across price and move below. The color also changes to green.
Wait for the next candlestick to open and then take a long position in the market. Set your stop loss to the recent swing low point on the price chart. You can then choose to trail the stop loss after every candlestick close until you get stopped out.
Bear in mind that you should also look for additional validation from the Schaff trend indicator. Here, we want to see the cycle turning positive as well, meaning that the STC indicator is moving from above the 25 level.
The linear regression breakout system for forex – Short positions
For short positions in the linear regression breakout system for forex, start by looking at the price and determine its trend. Here, we need to see the super trend indicator to cut across price and move above. The color also changes to red.
Wait for the next candlestick to open and then take a short position in the market. Set your stop loss to the recent swing high point on the price chart. You can then choose to trail the stop loss after every candlestick close until you get stopped out.
Bear in mind that you should also look for additional validation from the Schaff trend indicator. Here, we want to see the cycle turning negative as well, meaning that the STC indicator is moving from above the 75 level.
Is the linear regression breakout system for forex good for you?
In conclusion, the linear regression breakout system for forex is a simple trading system to use. It is so simple that one could even think about looking at an automated solution for trading this strategy. But in some ways, we find the linear regression breakout system for forex to be incomplete. Another point is that the name does not make any justifications at all. There are no linear regression methods employed, contrary to the title.
The linear regression breakout system for forex can be applied to any chart time frame of your choice. In our examples, we have made use of the one hour chart. This is perfectly normal because there are no indicators that limit to which time frame you can use this trading strategy.
Another point to bear in mind is the fact that the linear regression breakout system for forex can be used on multiple charts at the same time. The trading rules are simple, which makes it ideal for traders at all levels to make use of the linear regression breakout system for forex. Overall, this is a trading system that you can try out.
Download the complete system description and the files here:
Partially Automated Trading Besides Your Day Job
Alerts In Real-Time When Divergences Occur
