Least Squares MA
How to use, trade and calculate the Least Squares Moving Average
How to use, trade and calculate the Least Squares Moving Average
These indicators and concepts are specifically designed for TradingView.com
Least Squares Moving Average (LSMA) is a technical analysis indicator that attempts to identify the trend in the market. It is similar to other moving average indicators, such as Simple Moving Average (SMA) or Exponential Moving Average (EMA), but it uses a different calculation method that aims to reduce the effect of price volatility.
We can use the LSMA like other MA's but here are some steps you can follow to trade using LSMA:
To calculate the LSMA, first, you need to select a period, such as 10 or 20 days. Then, you need to calculate the sum of the squared differences between the current price and the average price over that period. Finally, you need to divide the sum by the period length and take the square root of the result.
Here is the formula for LSMA:
LSMA = Square Root (Sum[(Price - MA)^2] / Period)
where: