Polynomial Regression is a high quality professional analytical tool intended for the regression analysis and time series forecasting.
- Observations - the number of points to be analyzed (the number of bars for calculation, maximum 9000).
- Degree - regression level (1 - linear, 2 - square, 3 - cubic, etc., up to 9).
- Bounds - boundaries of confidence in dispersion in percentage (0 - not displayed).
- Forecast - forecast based on existing data.
There are a lot of methods of using this indicator for the market analysis. Here are the simplest of them.
- When Bounds=0 and Degree=2-9 - a moving average that has no analogs in the standard terminal package.
- When Bounds=100 and Degree=1 - linear regression (trading on a flat and long a trend in a channel).
- When Observations 100-3000, Bounds=95-99, Degree=2-9 and Forecast - trading from the channel borders with a short forecast.
- When using two regressions with different Observations parameter - the Puria method.
- The indicator can be used as a part of Elder's triple screen system.
This is only a small list of its capabilities.
The number of trading strategies that can be created on the basis of this indicator is really large. The indicator can be used both for scalping and for long-term investing, for trading along a trend and on a flat. You can see it on the screenshots.