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HomeForex MT4 IndicatorsLinear Regression Channel Indicator

Linear Regression Channel Indicator

Introduction to the Linear Regression Channel Indicator

The Linear Regression Channel Indicator is one of the most popular forex price channel indicators, including Fibonacci Channel, Keltner Channel, or Andrews Pitchfork Channel. It consists of three extensions to each side. These extensions are used to analyze the upper and lower limits of an ongoing trend. It helps traders to find the best entry points and exit points during price movements on the chart.

The Linear Regression Channel Indicator fits all kinds of timeframes and currency pairs. It is displayed directly on the main trading chart. The default settings can be modified directly from the input tab. Feel free to experiment with the settings and parameters to fit your personal preferences.

How does it work? How to apply in trading?

Trading Rules Explanation

The first step you need to take while trading with the Linear Regression Channel Indicator is to check the slope of the channel, whenever it is upwards or downwards. After you define it, proceed to define the entry point which stands at the penultimate extensions or the last extension. Detailed instructions are provided below.

Buy Signal

Follow these steps for a long trade:

  • The Linear Regression Channel slope is bullish
  • Price rejects the penultimate or last extension
  • Price swings higher from recent low swing
  • Buy trade is triggered after the above conditions are met
  • Set stop loss a few pips below the last swing low of the market
  • Take profit or exit whenever price reaches the opposite penultimate or last extension or use your own method of trade exit

Linear Regression Channel Indicator Example of Buy Trade

Sell Signal

Follow these steps for a short trade:

  • The Linear Regression Channel slope is bearish
  • Price rejects the penultimate or last extension
  • Price swings lower from recent high swing
  • Sell trade is triggered after the above conditions are met
  • Set stop loss a few pips above the last swing high of the market
  • Take profit or exit whenever price reaches the opposite penultimate or last extension or use your own method of trade exit

Linear Regression Channel Indicator Example of Sell Trade

As always, to achieve good results, remember about proper money management. To be a profitable trader you need to master discipline, emotions, and psychology. It is crucial to know when to trade, but also when not to trade. Avoid trading during unfavorable times and market conditions like low volume/volatility conditions, beyond major sessions, exotic currency pairs, wider spread, etc.

How to set up the Linear Regression Channel indicator in MT4?

Installation Guide

Download the Linear Regression Channel.rar archive at the bottom of this post, unpack it, then copy and paste the Linear Regression Channel.ex4 or Linear Regression Channel.mq4 indicator files into the MQL4 folder of the Metatrader 4 trading platform.

You can gain access to this folder by clicking the top menu options, which goes as follows:

File > Open Data Folder > MQL4 > Indicators (paste here).

Now go to the left side of your MT4 terminal. In the Navigator find the gauge name, right-click it and select Attach to the chart.

Bottom Line

The Linear Regression Channel indicator is well worth adding to your trading collection. A good forex indicator will most probably enhance your chance of success. Nonetheless, remember about having realistic expectations. Just like any other technical analysis tool, is not capable of providing accurate signals 100% of the time. Thus, this forex indicator provides false signals occasionally. Its performance will vary significantly depending on market conditions. Feel free to develop your own trading system based around it.

Download Free Forex MT4 Linear Regression Channel Indicator

To download the Linear Regression Channel Indicator for Metatrader 4 (MT4) for free just click the button below:

Linear Regression Channel Indicator Free Download

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