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Trade the Swing Price
Barbara Star's, "Trade the Swing Price" uses a 5-period linear
regression indicator as the basis for buy and sell signals. The
formulas for the reversal indicator and the system based on it are
below.
To enter this indicator into MetaStock; click on Tools | Indicator
Builder. Click New and type the name of the formula. Then click in the
larger window and type in the actual formula.
Name: Linear Regression Reversal Indicator
Formula:
If( LinearReg(C,5)>(Ref( LinearReg(C,5),-1)),+1,
If(
LinearReg(C,5)<(Ref(LinearReg(C,5),-1)),-1,0))
Here is the system test to go with it. To add this to MetaStock;
open the system tester. Click New and enter the name of the test. Then
enter the following formula in the respective areas. Please note,
MetaStock 8.0 will have a slightly different name for these areas, but
the formulas are the same. Also, the article suggested a trailing stop
for the exit conditions, but did not recommend how tight to set the
stop. Therefore, this tip makes not recommendation. After entering the
formulas, click on stops and enable the trailing stop for both long and
short positions. Set the trailing stop at a value you are comfortable
with and click Okay. The system test is now ready to use.
Name: Linear Regression Reversal
Enter Long:
LRR:=If( LinearReg(C,5)>(Ref( LinearReg(C,5),-1)),+1, If(
LinearReg(C,5)<(Ref(LinearReg(C,5),-1)),-1,0));
Ref(LRR,-1)=1 AND
C> Ref(C,-1)
Enter Short:
LRR:=If( LinearReg(C,5)>(Ref( LinearReg(C,5),-1)),+1, If(
LinearReg(C,5)<(Ref(LinearReg(C,5),-1)),-1,0));
Ref(LRR,-1)=-1 AND
C< Ref(C,-1)
William Golson
Equis International
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