# Linear Channels

## Linear Regression​

Linear regression is a way we calculate all points in the range to fit into one line. This is the middle line which we can see in the image above. From there we calculate the 1,2 & 3 standard deviations above that and draw the parallel lines to form this channel.

There are a few ways traders use these channels. If you have a downtrending channel, you would look at the standard deviation levels above the median point for potential short opportunities. Lining them up with other methods of confluence, if you manage to enter a short, you would use the swing level where the price got rejected as a deviation as a stop loss, then you would use the deviation levels below the median point to take profits. You can split your take profits into 3 levels or even 4 if you plan on using a trailing stop.

Note if you do enter a short position, like the image above, you will have to dynamically move your take profits to fit the channels movement. This does obviously require more individual management than most tools but it's also what makes them so effective. We would not recommend entering a short as shown in the image above, this is just an example. If you are trading in the same direction as the channel your TP will do the opposite and keep moving away from your entry which has pros and cons but once again will mean that you want to manage the trade

You can also use these channels to determine whether market structure is changing, if you have an uptrending channel but price starts closing below the lower deviation this tells us that we are losing momentum and looking to put in a Lower Low instead of another Higher low.

## Configuration​

The sensitivity input will determine the range we want to be calculating our channels from. The higher the value the longer back we are looking. We personally like the value 10 however you may want to change this depending what timeframe and asset you are looking at.

## Display​

You have an option to enable/disable them along with their labels, you also have the option to change the colour and styles of the lines. The colour options are grouped into upper and lower parts of the channel. Some traders like to look at these channels with the upper part being where you are shorting and the lower part being long.