Thursday, April 10, 2014

Day Trading With Linear Regression Channels; SchoolOfTrade.com



In today's video we take a look at the very popular Linear Regression Channel! 

This is an awesome way to see where a good place to buy and sell is in the markets we trade as well as where to place targets and stops and everything in between for some VERY high percentage setups!


In today’s video we will teach you how to use a Linear Regression Channel to earn day trading profits on any market around the world.

Let’s first begin with the definition of a Linear Regression Channel:
·        A “Linear Regression Channel” is created by drawing equal Standard Deviations from the “Linear Regression trend-line”.

Bearish Regression Channel 
·        A “Linear Regression Trend-line” (often called the Mid-Line) shows the equilibrium prices of the market you are trading; while the “Linear Regression Channel” shows the deviations of price away from the “Linear Regression Trend-line(did we confuse you yet?  It gets much easier, I promise)

Bullish Regression Channel 
·        The bottom of the Linear Regression Channel is considered SUPPORT, while the highs of the Linear Regression Channel are considered RESISTANCE.


How to use a Linear Regression Channel in your trading:
The most effective way to use a Linear Regression Channel is to combine multiple chart timeframes and follow the long-term-trend.

You will use 2 charts:
1.     The Anchor chart defines the long-term-trend, and will plot a long term Linear Regression Channel
2.     The Entry chart defines the short-term trend, and will plot a short term Linear Regression Channel

Enter the Trade using a Linear Regression Channel: (Buying Scenario)
·        Step 1:  Wait for a BULLISH Linear Regression Channel on the Anchor chart
·        Step 2:  Wait for a BULLISH Linear Regression Channel on the Entry chart
·        Step 3:  Enter LONG at the lows of the Linear Regression Channel on the Entry Chart.

Place your Profit-targets using the Linear Regression Channel:
·        Place two profit-targets, first at the mid-line, and second at the highs of the Linear Regression Channel

Place your Stop-loss using the Linear Regression Channel:
·        Place your stop-loss 3 ticks below the low of the entry bar

Trading LONG with Regression Channel


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Enter the Trade using a Linear Regression Channel: (Selling Scenario)
·        Step 1:  Wait for a BEARISH Linear Regression Channel on the Anchor chart
·        Step 2:  Wait for a BEARISH Linear Regression Channel on the Entry chart
·        Step 3:  Enter SHORT at the highs of the Linear Regression Channel on the Entry Chart.

Place your Profit-targets using the Linear Regression Channel:
·        Place two profit-targets, first at the mid-line, and second at the lows of the Linear Regression Channel

Place your Stop-loss using the Linear Regression Channel:
·        Place your stop-loss 3 ticks above the high of the entry bar

Trading SHORT with Regression Channel


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