Linear Regression Slope

Overview

The Linear Regression Slope indicator calculates the slope value of theoretical regression lines which involve that bar and the previous n-1 bars (n = regression periods) for each bar loaded in the chart. (See the Linear Regression Indicator for additional details about regression lines).

The slope values are then normalized by multiplying the raw slope values by 100 and then dividing by the price (raw slope * 100 / price). The normalization of the slope values is important when comparing markets that trade within different price ranges. The normalized slope value basically shows the percent change in price per bar of the regression (best fit) line. If the normalized slope is 0.20, then the regression line is rising at a rate of 0.20% per bar. Similarly, a normalized slope of -0.55 would indicate that the regression line is declining at the rate o 0.55% per bar.

Implementation

In VTtrader, the Linear Regression Slope indicator allows for price selection, regression periods, smoothing of RAW price before applying the regression and selection of smoothing type.

The resulting regression slope indicator is displayed as a bi-color histogram that oscillates above and below 0. A reference line is set at the 0 level. A rising slope (greater than its previous value 1 bar ago) is displayed in the UpSlope color, while a declining slope (lower than its previous value 1 bar ago) is displayed in the DownSlope color.

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