# Linear Regression Channel

Linear Regression Channel
The linear regression channel is a drawing tool with a calculation function. You as the user define the start and end point of the channel as well as the calculation method for the outer lines. The definite position of the channel in the chart, however, results from the calculation of the mid-line.

The mid-line of the channel is calculated on the basis of linear regression with the least square method. In this method, the line that is drawn through a number of data points effectively reflects the trend. The channel is constructed with lines above and below the mid-line, in defined distances.

The linear regression channel may be used for:
• visualizing trends
• searching swing points
• finding resistance and support levels
You can find the tool in the Chart Tools group in the toolbar.

## Entering a Linear Regression Channel

1. Open a symbol chart.
2. Click on the linear regression channel tool in the toolbar.
3. Click into the chart to set the starting point of the linear regression channel.
4. Keep the mouse button pressed and move the pointer to the end point of the linear regression channel. Release the mouse button.
By default, the linear regression channel is drawn with a standard deviation of "2" from the linear regression line. Therefore, the width of the channel depends on the price volatility over the time span between the channel start and end.

Since the linear regression channel is based on calculation, it aligns to the data points almost as if in Snap Mode.

## Editing a Linear Regression Channel

• To move the linear regression channel, drag it with the mouse (the mouse pointer turns into a hand symbol) and move it. Release the mouse button when done. Note that since the linear regression channel is based on calculation, it aligns to the data points almost as if in Snap Mode.
• To extend the length of the linear regression channel, i.e. the data points used for calculation, click an anchor point at the end of the middle line (the mouse pointer changes into a double arrow) and drag it.
• To extend the length of the channel until the right or left edge of the chart, double-click on the respective anchor point at the end of the middle line.
• You can duplicate a linear regression channel by double-clicking on it.
• When the linear regression channel is selected, you can edit the properties in the toolbox.
• You can edit the width of the linear regression channel either by changing the StdDev parameters for the Standard Deviation or by selecting another calculation method for the channel (see below).
• The alert function is available for the linear regression channel. To set an alert, set the Alert Mode from Disabled to one of the options (see below).
• To delete the linear regression channel, right-click on it and select Delete from the context menu. Alternatively, select the linear regression channel and press the DEL key.

## Properties

### Regression Channel Properties

Extend Left/Extend Right - Select if the channel is to be extended to the left and/or right until the edge of the chart.

Channel Method - Select the method that will be used for calculating the channel:
• Standard Deviation - The width of the channel is given by the measured standard deviation in the channel's time span. The StDvs up and StDvs down parameters give the offset (above and below) from the regression line.
• High / Low - The channel includes the highest and lowest price within the time span. This channel method is similar to the classic Trend Channel.
• Percentage - The width is given as percentage of the price at the last anchor point. The % parameter gives the offset from the regression line.

### Graphic Properties

The following properties can be set for the linear regression tool:

Color - Here you can select a color for the lines.

Width - Here you can set a line width by entering a number.

Style - Here you can select a line style, e.g. solid or dotted.

Shadow - Here you can set a shadow for emphasizing the lines with a 3D effect. Four settings are available.

Fill Color - Here you can select a color and opacity for the channel area.

Label - Here you can set the value label for the current data point to visible or hidden. In Tradesignal you can also specifiy the location at which the label should be displayed.

The linear regression channel tool can be used with various kinds of alerts.

Alert Direction - Here you can select from the list whether crossings of all types lead to alerts or only crossings in a certain direction.

Alert Mode - Here you can select an alert mode from the list. Select whether every crossing is considered or only one crossing per trading period or trend line.

Alert Name - Here you can specify a name for alerts generated by this tool. It will be included in the signal field of the alert.

Alert Trigger - Here you can select when an alert should be triggered.
• Crossed: Triggers when the price crosses the tool, e.g. goes from below the tool to above the tool
• Hit or Crossed: Same as above, but also triggers when the price merely hits the tool. This setting is useful for a Point&Figure Chart.
• Break-in/Break-out: Treats the tool not as two separate lines but as a channel instead and triggers an alert, when the price breaks into or out of the tool's channel.