# Traders' Tips from TASC Magazine

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