Polynom/Polyfit

Hey!

I looked into the polyfit, polynom-section in the manual the other day, which states:

How is this being presented in the charts? For example, when running the example script that is given, the chart would look like this:
http://postimg.org/image/mo5ypp74p/

I have a hard time interpreting the results of the blue and the green line. What do they mean? And how can they tell me information about the future?

One thing I “discovered” is where I marked with a red circle. Where the blue movesup while the price goes down. Is this an example of such a prediction?



Many thanks

MS

In the example, the "predict" variable is the current price plus the predicted price change within the next 3 bars - under the assumption that the recent part of the price curve resembles a polynom.

What you do with this information is up to you. For instance, you could enter a long trade if the predicted price change is above a threshold, and a short trade if it is below a negative threshold. The correlation variable can be used for preventing trades when the correlation is low.

In this forum section some threads before, another user has posted a similar indicator that predicts prices under the assumption that the recent price curve resembles an exponential function.

Hi!

Sorry for a late answer - I just read through my posts under "My stuff", and found this old goodie.

I just wonder if there is a way for you to explain to me what a "polynom" is. Unfortunately, I didn't go that far in my match class (I guess it has something to do with math...)

Thank you!

http://en.wikipedia.org/wiki/Polynomial_regression

Hi GP!

Sorry for being unclear. I've read the page you linked, among others.
Is there a way you can make this clearer to me by explaining it with an example?

Thank you.

Polynomial regression works the same as linear regression, but it models the relationship between variables as a polynomial (quadratic, cubic, quartic or higher degree) instead of as a straight line (degree one).

That's about as simple an explanation as you'll find. If that doesn't make sense to you, it would be worth your while brushing up on your math. Check out Kahn Academy for some courses to quickly get you up to speed.