Trend Channel is a
VertexFX client side VTL indicator. The indicator plots the trend channel on
the basis of the method of linear regression. This channel can be viewed as a
line of "equilibrium" prices and any deflection up or down indicates
increased activity of buyers or sellers.
The Linear Regression
technique is a statistical methodology to determine how closely a set of points
are related to each other and whether a function can define these set of
points. Each point can then be expressed as y = Ax + B, where A is the Slope and
B is the intercept.
This concept is applied in this indicator. At
first step, we calculate the regression variables over the most recent PERIOD
candles. In the second step, we calculate the Slope and Intercept based on the
regression variables. In the final step, the Linear Regression Line is
approximated and calculated for the latest candle using the calculated Slope
and Intercept.
The idea behind this
technique is that in trending markets, the prices are well-organized and can be
predicted with better accuracy than in sideways markets where the randomness is
higher and hence predictability is lower. When the market is trending upwards
or downwards, the accuracy of the Slope and Intercept is better, and hence the
predicted value of the Linear Regression Line is more accurate. At the same
time, the predicted Linear Regression Line follows the trend. When the trend
stalls, the variation in the line increases and it is very likely that the
price breaches the line. This step is repeated when a new trend is detected.
Hence the Linear Regression Line provides an excellent trend-following signal
with minimal lag.
Trading using Trend
Channel indicator:
In an uptrend (line
up the slope) it is recommended to open a buy position.
In a downtrend, it is recommended to open sell positions.
In a downtrend, it is recommended to open sell positions.
In an uptrend, place
buy position when the price reaches the bottom of the orange line (target №1)
or the lower green line (goal number 2).
Closing of the
transaction is advised when the price reaches the top of the orange line
(target №1) or the upper green line (goal number 2).
In a downtrend, place sell position when the price reaches the upper green or orange line, and close the deal when the lower green or orange lines.
In a downtrend, place sell position when the price reaches the upper green or orange line, and close the deal when the lower green or orange lines.
To use Trend Channel
indicator download it from here, then place it at VertexFX VTL directory:
C:\ProgramData\VertexFX
Client Terminals\"Company name"\VTL10\Local VTL Scripts
Then right click on
the tree and select refresh or restart your client station and you will find under
VTL local scripts in your client terminal.
You can check this
video that talks about Trend Channel indicator: