# How to Calculate and Trade With the TSF

The Time Series Forecast (TSF) indicator uses the Linear Regression to predict the future price. In this article I show how you can calculate the TSF in Excel. I also show how you can use the TSF to trade the GBP/USD forex pair.

### What is the TSF Indicator? The TSF indicator is based on an extension of the linear regression line. The linear regression calculates the best fit straight line through a series of data. The chart shown here shows the linear regression line and a dotted extension.

You can see how the line is a very good fit through the past data. Unlike the linear regression line, the TSF is recalculated each bar. This means that it looks like a moving average and can be used in a similar way.

Because the TSF is fitting to the data rather than averaging it, it tends to move more quickly than moving averages.

### How to Calculate the TSF

I will be calculating the TSF based on the Close Price. In this example I am going to use a 20 period lookback period and a 1 period forecast period. This means that the current TSF will be trying to predict the close of the following period.

To start we need some historic data. In this example I am going to use the GBP/USD. The close data is in Column F and the TSF will be calculated in Column G.

#### Step 1

Firstly we need to enter the number of lookback periods and the forecast period.

Cell G2 =20
Cell G3 =1

#### Step 2

Then we need to have a number series that counts 20 values from 0 to 19. In my spreadsheet I am entering them in cells G182:G201.

Cells G182:G201 =0,1,2,3…19

The spreadsheet should now look like this: #### Step 3

Enter the TSF formula. Excel makes this very easy because it has a built-in function that does the work. The function is called =FORECAST. In my spreadsheet I am entering the first TSF calculation in Cell G205. I am referring the values in cells G2, G3 and G182:G201.

Cell G205 =FORECAST(\$G\$2+G\$3-1,F186:F205,\$G\$182:\$G\$201)

#### Step 4

Copy the fomulas down to the cells below by double-clicking on the bottom right hand corner of Cell G205.

For more guidance on how to calculate the TSF check out the video below.

### How to Trade with the TSF

Tradinformed Backtest Spreadsheets are based in Excel and allow anyone to test trading strategies. I wanted to have a look at how the TSF has performed as a trade entry signal for the GBP/USD pair.

I wanted to test how well this indicator performs on its own. Without any filters, stops or targets. In this test I bought when the price was greater than the TSF and sold when the price was lower than the TSF. I used the GBP/USD close price from 2008-2016 on the daily timeframe. I did not test a stop-loss or profit target.

#### Results

Net Profit \$57,113
Profit Factor1.26