It is believed that technical analysis in trading almost does not work. The market is driven by psychology, large investors, panic and greed. In other words, proponents of this model believe that the market is chaotic and it is impossible to predict its actions. Nevertheless, the same large investors refute this thesis: they perfectly track the places of accumulation of stops, deploy the market at the right time, etc. The market is cyclical. And even if in the short term it seems chaotic, long-term intervals have their own patterns. These patterns are described by mathematical techniques and statistics.

The idea of ​​linear regression, which is the basis of the basic indicator Linear Regression, is to build a channel based on the values ​​of the candles. If there are many points on the plane (the closing price of candles), then based on them you can build only one straight line, where each of its points will be at a minimum distance from the sum of the squares of the source points. The straight line is built according to the linear equation and is at the maximum average price deviation.

Indicator Formula:

X is the current time period, n is the total number of periods.

The Linear Regression indicator is another attempt to use mathematics and statistics to calculate the price deviation range in which it is located most of the time. One of its versions can be found in the review.

The strategy below uses three indicators:

  • Linear Regression (adapted version). This is an indicator that uses the approximation of price readings by a linear function. Approximation (approximation) is a method of replacing one object with another, close to the original, but simpler. Simply put, the channel indicator, drawing broken lines while maintaining the linear function is adapted to one curve that changes color when there are strong potential price deviations in one direction or another.
  • Xaser-FV. An indicator of volatility, which serves not so much to confirm a signal, but to limit loss. It is intended for trend trading, cutting off flat areas, but it does not show the direction of the price. It is noteworthy that its formula is not freely available, and there’s no point in crawling into the code. In extreme cases, this indicator can be replaced with a classic ATR.
  • RSI Here, I think, everything is clear.

Timeframe – H4, currency pair – any of the most popular classic ones. Indicator Settings:

  1. Linear Regression:
  2. TimeFrame = Current. This corresponds to the current time interval of 4 hours.
  3. LrsPeriod = 40. The indicator period.
  4. Price = 0. Type of price, “0” – calculation at candlestick closing prices.
  • Xaser-FV:
  • XaserPeriod = 14. Period for calculating the indicator.
  • FlatPeriod = 0. The period of flat calculation. The value is “0”
  • RSI:
  • Period = 14.
  • Apply To – Close.
  • Levels: 30-50-70.

Conditions for opening a long position:

  • Linear Regression draws a green line after red.
  • RSI is above level 50.
  • Xaser-FV for at least 3 candles was near zero. Then on several candles (2-3 candles) takes a different meaning.

On the next candle, open a deal. Target profit – 30 points, stop – 30-50 points, further exit conditions from the market – at the discretion of the trader. You can completely close the deal, you can ensure trailing.

First, look at the behavior of Linear Regression. The length of the red or green section is not important, the fact of the color change is important. Then we look at the RSI, he rose to the 70th level on the same candle. Xaser-FV showed at least 3 candles a flat and then began to leave its zone. Please note that already on the next candle one could open an effective deal. But there is a condition in the strategy: to enable Xaser-FV with at least 2 candles to show exit from the flat. And even if you enter one candle late, the deal will still give a profit.

Conditions for opening a short position:

  • Linear Regression draws a red line after green.
  • RSI is below level 50.
  • Xaser-FV for at least 3 candles was near zero. Then on several candles (2-3 candles) takes a different meaning.

The principle of opening a deal and leaving the market is similar.

Here the situation with the short position is similar. Please note that the signal to open a long position is marked to the right in green circles (the time interval through which signals appear) is clearly visible. The situation is slightly different: Linear Regression has already changed color to green, but the RSI is late, being below the 50th level. The Xaser-FV is delayed along with it. Open only on Linear Regression could be profitable, but I would still recommend waiting for the confirmation of the signal from other indicators. The candle for entry is indicated by an arrow.

This strategy should be classified as complex and rather ambiguous. But its advantage is that for novice traders, it trains the skill of intuitive understanding of the market. The problem is how to determine the signal candle because the simultaneous coincidence of all factors is rare. Therefore, it is important not to be late and not enter the market too early. How to catch this moment? First, find as many similar matches on history as possible.

Conclusion. Intraday strategies are a kind of middle ground between scalping and long-term. It requires moderately emotional stress, relatively constant control (although no one forces you to sit at the monitor every minute). Ideal for beginners. What trading systems do you prefer? I invite you to share your experience in the comments! Any comments on the proposed strategies will also be interesting!

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